I'd suggest a used camera off Ebay instead of the children's cameras made by various toy companies. When I was researching the same thing six months ago they had pretty poor reviews across the board. Basically to get good shot you had to be in direct sunlight and the child had to hold the camera perfectly still. We ended up getting a Fujifilm 2600 for $15 off ebay. It was 2.1 megapixels, and the cheap price meant if our five-year-old dropped it we wouldn't be freaking out.
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