There's a company, Moppet Video, that released a bunch of games, which are available in Mame, that were specifically designed with young kids in mind. Leprechaun, Pirate Treasure, Noah's Ark, and Tugboat. They are old (early '80s) and very simple but I guess thats what makes them good for kids. I wouldn't call them great games but might be worth a try for real young kids.
Also, Pigout was mention which is a fun game and another one is Peter Pack Rat.