Digital Video Camera and Editing S/W for a Kid?

My youngest likes to record video, but has been doing so on busted equipment and doesn’t have anyone that knows what to do with it once he’s got it. His birthday’s coming up and I’d like to get him a DV camera and sit down and learn a piece of editing software that folks recommend so I know he’ll be able to do cool things with the resulting video.

Does anyone have any recommendations? Is the video editing software that comes with XP any good (that’s what he runs on his laptop)? How about the one that comes with Vista?

Thanks!