Found a fix here: http://ios.wonderhowto.com/how-to/message-effects-not-working-ios-10-heres-enable-them-0173872/
I had to FIRST disable "Reduced Motion", and THEN toggle iMessage off and on... so if you're still having trouble, try doing it in this order.
I've tried both suggestions while trying to get the effects to work on a friend of mines phone. Any more suggestions? Anyone else still not get theirs working?