Last week I worked with my little sister (age 11) to make a baby quilt for our newest baby sister (due in September). She had never sewn at all before. What I did first was turn her loose with a simple quilt design software and let her design the quilt herself. We used the Quilt Design Wizard. I was there to gently nudge her in the direction of simple blocks
but over all she came up with the design - a three tone rail fence in pink, blue, and yellow gingham with raw edge applique angels and sayings fussy cut from a fabric I had in my stash. I started out to teach her to use my old sewing machine, but in the end we knew we had limited time together (one week) so I handled construction for the most part while she did the pressing. She also determined the layout for the fussy cut peices and fused those herself. I did the machine quilting and put the binding on myself after she went home. I'll post a picture as soon as I get a chance.
As for advise here goes. I have taught my daughters some basic hand peicing, and for anyone under the age of 9 or 10 I think this is the way to go for safety's sake. Just teach them to sew on the line. Older kids though I definately would go with the machine. Give them some fabric and just let them get used to sewing around on it. Once they get the idea of just sewing set them up with a quarter inch foot, mark the quarter inch on the machine with a layer of tape or post it notes, and have them try puttig together strips. Madison was getting pretty good at using the machine by the end of the week. Just be REALLY patient and understand that Rome was not built in a day. They will get it eventually.