If you haven’t got around to shopping for gifts for kids at this point you are probably in trouble. Most of the good stuff is probably gone. But there is still some free stuff online that you might be able to get away with. I guess it would be hard to wrap, but face it, your choices are limited at this point.
LEGO Digital Designer is free official LEGO software that lets you design models, find out how much they would cost to build, and even order the pieces to make it. Obviously that last part is why it makes sense to offer a free Digital Designer, but up till then its just fun.
ArtRage 2 Free Edition is really fun for playing around with making art. The interface is pretty unusual, but kids should adapt easy. Making art on the computer is a lot less messy than in real life and kids can get some exposure to the different types of brushes and other art supplies they probably would not get otherwise.
Paint.NET is pretty good too for those a bit older who want to mess around with photos or drawing or those who just want to make squiggles and scribbles. I didn’t go into it very deep, but it looks pretty good. I used to use paint programs with about that level of features when I was in middle school.
Sebran’s ABC wasn’t my favorite of what I found, but I am not really the target audience. It doesn’t seem as polished as the others but is more educational and aimed at younger kids.
Wolfenstein: Enemy Territory looks great if you aren’t worried about top of the line graphics and stuff. I tried it a few years ago and didn’t like it much, but I have never been much of a gamer. I want something that is easy and fun rather than something where I get killed over and over again.
Rockstar Games has three classic games updated to run on modern PCs available if you give them your email address including the first two Grand Theft Autos.
Scorched 3D is based on the classic DOS game Scorched Earth that we played in computer class almost daily in high school. I have not tried this update, but it looks a whole lot nicer.
If you are really geeky, you might setup Tyrian 2000, and official remake of the original Tyrian which I loved years ago. It was released by the author as freeware. The site says it might require DOSBox. Without any effort it ran for me in Windows XP, but it was choppy and had no sound.
And finally, Railroad Tycoon. I have never played it, but it seems to have lots of fans. It looks a lot like the first SimCity.