I got my 6 year old son a Flip camera for his birthday, and it has turned out to be one of the best gifts I have ever given him. It's super easy to use and all three kids have acquired the acting bug! Dell.com currently has a super deal on a pocket sized video camcorder. Regular price is $84.99, but it is on sale right now for $39.99. Go through ebates to get another 4% off.
Thanks to Nickels and Dimes for the information!