Photodoto have written an excellent guide on introducing your children to photography. They suggest starting off with an older 2 megapixel camera and seeing how it goes from there, if they like it, then move on to a better camera, such as the Kodak Easyshare C613 or C713 (£49 at Amazon).
“Don’t rush out and buy a new camera for your child’s first attempt. You’ve probably got an old camera somewhere, it doesn’t matter if it’s a film camera or an early digital camera with 2 MP, as long as it works it’ll do. If your child shows interest for more than a week or so then the chances are a new camera just for him will be used and appreciated.”
My only concern with this is the the extending lens could be easily damaged, and while the Olympus 1030SW would survive rough treatment, it’s price is a little too much for small kids. Are there any new cameras available that don’t have an extending lens, but are still budget friendly?