We've been working with a kids visual programming language called Scratch created by the Life Long Kindergarten Group at the MIT Media Lab. You can check it out and download the program at http://scratch.mit.edu/. Our first Scratch explorations were just checking out the sample projects included with the download. Scratch is based on manipulation of graphical characters called sprites using scripts constructed from modular program elements. Here's the interface showing some built-in characters that Sam was playing with.
C's first project involved taking photos of him with his bayonet and sword so he could set up an animation. It was more an exercise in Photoshop, but he had a good time learning how to select himself and export the pictures to Scratch. The background is from a Harry Potter printer projects CD.
There are four separate pictures (called costumes in Scratch) of him brandishing his weapon that make up his animation. We expect to use this project as the basis of a more complicated project later.
The script is simple--it just loops through the costumes with a delay to make it visible.
The kids will sit for hours just playing with the program. We've had neighbor kids over and gotten the same reaction. I burned them a CD with the program. This is a long way from the tty terminal we had in high school for our Basic programs. We would type them in and wait for our turn on the timeshare system. There's a pretty elaborate website set up at MIT that has projects submitted by kids of all ages from all over (parts of) the world. I uploaded one project I was playing with just to try it out. You can view it at http://scratch.mit.edu/projects/oldfogey/158563