Keyboard Capers is great for introducing music theory, and can be begun as early as age three if you have a piano or keyboard.
Software that I highly recommend for older children who use the computer is Music Ace (both volumes 1 and 2 can be purchased together as Music Ace Gold).
Recorder is an easy instrument to learn once kids’ hands are large enough to be able to cover the holes, around age six – public schools usually teach recorder in fourth grade. Note that you get what you pay for; a $15 recorder will last much longer than a $2 recorder. One option for recorder curriculum is Suzuki. Another is Nine Note Recorder Method.
I highly recommend Jean Welles’ Worship Guitar Class dvds. She has a Kids’ Guitar Class dvd for ages 6-10, plus the two three four-volume set for adults (and teens).
Private music lessons are beneficial, if you can afford them. If you have three or more students taking lessons from the same teacher, you should be able to find someone who will come to your home to teach.