I just did the same thing recently, for Punkin who will be 7 in Feb. and desperately wants a camera for Christmas.
All the kids' ones I saw got very bad reviews for poor photo quality and camera durability. He also doesn't need it to play games or add silly stuff to the photos. I ended up getting him a Kodak Easyshare (c122 I think?? It's hidden away in the closet) that was on sale at TRU a couple weeks ago for $50. It has 8mp and got good reviews. I just couldn't stomach spending more on his first camera, but he really wants to take his own pictures so I know he will actually care how they turn out. HTH!
Mama to DS1 Punkin (2/04) and DS2 Boo (1/09)