My 2 year old constantly plays w his penis by taking out of his diaper

My son will be 3 in July, and he is potty trained.  He is constantly playing with his, and i am ok with that.  I do however set boundries for him, and make him respect those boundries.  Afterall, this is a completely natural for children (and some adults) to do.  I tell him that he is going to touch himself, he needs to do it in his room where there is no one around, and no distractions.  I have also made it clear to him that only he, mommy and daddy are allowed to touch him, and if someone else touched him, he needs to let one of us know. 

This seemed to get things under control for us!  I hope this helps!  Remember, this is a stage!  It may be time for you to begin potty training your little guy since he is now aware of his 'parts', and recognizes the different sensations.