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Following up on Fuzzy Heroes, you may want to know that Edmund Metheny and Sophie Lagacé maintain a nifty page on RPGs for children. It includes games specifically designed for kids as well as games that can be enjoyed by all ages. And some links.
In the meantime, at Indie Press Revolution I found a game from John Wick called My Monster, a simple RPG with children’s drawings for telling stories about monsters. (source)
Source also has a great story about Wil Wheaton (Wesley Crusher of ST:TNG) sitting down to play an RPG based on ST:TNG and being handed the character of Wesley Crusher.
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Dont forget Faery’s Tale Deluxe from Green Ronin. Has a couple free adventures as well