Zimmer Twins is a child-friendly site where kids can create a movie and practise their literacy skills at the same time. I described it on my Book Chook blog.
Here's an excerpt from my post: It's a nice simple interface. The beginning video explains the process well. I think the easiest way for a child to begin after that would be to choose a little movie starter. This is just like a writing prompt, a way into a story to get kids going. Then they can build the rest of the story, using four tabs: text in speech bubbles, snippets of character movement, emotion and special effects. Once you click an option (from the four tabs), it appears in your timeline, and on your editing screen, where you can add text to it.