If you cannot afford Photoshop, Jasc's Paint Shop Pro is a decent clone, and is just under $100 as I recall.
As many others have stated, a Wacom Tablet is really a fantastic item. I don't know what I'd do without mine.
Those are considerably more expensive however ( I got mine factory refurbished for around $230 from www.wacom.com
There are other brands which may offer cheaper alternatives. Aiptek is one that springs to mind. I've heard pretty good things about thier tablets. (I just checked, and you can get a 6"x8" tablet for only $49.99).
Good luck! Way to go encouraging your kids artistic aspirations! Good job Dad!