According to that review of budget cameras, the Panasonic LZ8 seems to be the best of the bunch.
- video at 30fps is a must for any kid.
- Normal SD/CF memory cards to keep cost down (Bad Sony!)
- Low Cost (imo, bigger and slightly bulkier is good for kids as well)
- Image Stabilization (Nikon doesn't have this)
- Manual as well as auto modes(part of this is to teach him the basics, right?)
- AA batteries (Fuji is a proprietary Lithium-Ion)
Has me actually wanting one as a cheap backup