I think it depends on the kid. If she's not interested in photography, then don't worry about a camera. But if she is interested, and loves using the parents' digicams, the picture quality from the Fisher Price is likely to disappoint everybody. Depending on the budget and the five-year-old, another alternative might be something like the
Vivitar ViviCam 6200W--it's $150 on Amazon, it's waterproof, has a rugged rubberized case, and it's got a 6MP sensor. Dunno if it can take abuse like the Fisher-Price, but it's a bit hardier than your typical digicam and the picture quality will be like a real camera, not a toy.