"The animal" or "the animals"?

You're wrong. It should be, "Small children love playing with animals." The definite article does not make a generic reference with a broad word like "animal"; you'd need to narrow it down. (I'd never realized that before now.) The chipmunk is a good climber, but the animal is nothing. (Chipmunks are good climbers, and animals are capable of movement.) The automobile is a modern necessity, but the vehicle cannot be. To get a generic in this case, you need the plural.

The generic reference is a frail thing. It easily decays into a specific reference when exposed to certain contexts. Yours is one, if you use a more suitable word than "animal". You can't say that small children love playing with the dog and mean dogs in general, because the reader wonders what dog, and there's nothing you can do about it. But man can have domesticated the dog in prehistory, because we all know which dog—the generic one.

i think "the animals" is best.

"The animal" is NOT a collective noun, it's completely singular. Grammatically, that means it would talk about one animal, and one animal alone. You should say the animals.


**Side Note:
Are you talking about a specific group of animals? If you aren't, you should take away the article, "the".