Lots of good different answers here, but let me say, having a 10 year old brother right now and seeing how he's grown up in my household, I think an iMac G3 would be best for a younger kid. The only part of the computer they'd touch (for the most part) is the keyboard and mouse, which are easy and cheap to replace if they get broken, and they all play OS 9 games well. It's stationary, so the kids have to be sitting in one place with the computer, so they won't break it simply by carrying it around or sitting on it when it's on the couch or something too. If you are serious about getting a laptop, a white iBook G3 probably fits the best for cheap, easily replaceable and sturdy, and not too rare, while still getting OS 9 native support (and OS X, if they grow into that eventually!).
When I was about 7 we got our first iMac G3 and I spent hours playing games like Bugdom, Bub & Bob, and Pac-the-Man. Nothing crazy intensive, but they run well on these machines. I had a Pismo when I was in middle school (and it was about 6 years old at the time) and it served me well for the light gaming, music, and web browsing I did, but I also took very good care of my electronics, and I know not everyone does that when they are that young (or old!). These days, it's hard enough to find a Pismo as a collector, let alone to give a small kid that may not take perfect care of one.
Good luck, make sure you tell us what you end up getting for them!
