Stimulating active, social interactions for people with dementia is an important and timely challenge that merits continuing attention in design research. The idea of using participatory co-design to engage people with dementia is attracting increased interest. In this paper, we draw on our qualitative study that used a playful, participatory arts approach to explore the ways co-design could be implemented in a group of 12 people with dementia and their carers, and developed practical recommendations, in the form of a set of playing cards, for other researchers and caregivers to work in similar ways. The emphasis is on the value of play and playfulness, providing a 'magic circle' (Huizinga, 1955) that fosters the required conditions for a co-creative, co-design space. This aims to encourage social interaction between people with dementia, to stimulate imagination and creativity; and engage even the most the reticent, less confident members. Our observations, however, suggest that the exact notion and nature of co-design within the context of working with people with dementia is unclear. We critically explore whether such participatory creative practices that engage people with dementia can be considered as purely co-design. In conclusion, we argue that such interaction is better described as co-creation and that this definition can still embrace considerable contribution and involvement by people with dementia in a co-design process.