A while back I bought my daughter a Vtech Kidizoom, trying to hook her up on photography. Looking back at the experience, I can say that she is doing pretty well.
On the bright side, she enjoys taking pictures and does a darn fine job too. Of course, being able to come down to daddy’s studio with flashes set up does not hurt her fun one bit.
On the “dark” side, the image quality sucks! We thought we could handle it and that the grainy look would be “fun” and “Lomo”y, but even she is a bit annoyed with the noise of the photographs when viewed large.
I came across this video that shows how you can impact-proof a camera using moldable plastic called Sugru. It’s kinda like plasticine, only it hardens as rubber, and can take quite an impact. Not sure why they used an ancient Sony Cybershot for the video, but even that old camera will get better results than your standard “kids” cam.