KidzMail 1.1 is a full-featured email client designed for children. Kids can also draw pictures and send them (as jpeg attachments); recipients are chosen from a list of pictures and names in the address book. Parents can have full control over the address book. It even has the ability to send coded messages that only KidzMail can decode.
KidzMail is $10 for Mac OS X and Mac OS 9, and a Windows version is in the works.