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In a book a did on buying a first digital camera, I mentioned that "if you want to spoil a child's interest in photography, buy them a camera made specifically for 'kids.'"
Invariably, these cameras use 5-10 year old technology (VGA video, for example!) repackaged to look cool.
Buy a used 5 MP decent camera for a few bucks used and let them have something halfway decent.
If they ruin it, you're out ten dollars and you know your kid isn't ready for something better.
If they really get into it and take care of it, buy them a better camera.
ACPress.com - creative stuff, y'know!