A co-op friend (thanks Tory!  ) recommended Sansa MP3 players for kids. Here's a photo of the Sansa Shaker (AMAZON.COM LINK HERE) 
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It is a really fun way in playing musics, shake and run. Launched by SanDisk Corp., the Sansa Shaker MP3 player has unique approach for playing music. Designed especially for kids, the player offers 2 headphone jacks as well as built-in speaker to share the voices. Available in pink and blue, the device powered by an AAA batter which boasts up to 15 hours of music playing. It also equipped with 512 SD flash memory card or equal to 123 songs. According to the announcement the new Sansa will be available late this month for US $39.99 in USA

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Amazon.com Product Description The Sansa Shaker puts fun first with its design and functionality. Shake the device to jump to the next song, or use the colorful controller bands to advance or rewind songs. It's got two headphone jacks and a built-in speaker to share your favorite music with your friends. A 512 MB SD Card is included, and can be replaced with a larger capacity card. Powered by a single AAA battery providing up to 15 hours of music life. The Shaker is available in Pink or Blue, and comes with a colorful bunch of stickers so kids can customize their devices.
Shake, Rattle and Roll The Sansa Shaker gets its name from its most exciting feature--the ability to jump to the next song by simply shaking the device. You can also use the colorful controller bands for advancing/rewinding and changing volume. Kids ages 8 and up can have a blast with their favorite songs. Even the system sounds are fun, with an "Uh-Oh" sound indicating a low battery, and other sound effects.
Share Your Music The Shaker is all about sharing your favorite songs. Use the built-in speaker to enjoy music without headphones, or listen with friends and family. It's also got two headphone jacks, so you and a friend can both plug in for a more intimate experience. Finally, since the Shaker uses SD Cards, you can play and share cards loaded with your favorite tunes. A 512 MB SD Card is included.
Adding Music Adding music is simple. Just twist open the cap of your Shaker and connect to your PC via the included USB cable. The device will appear as a drive in your Windows Explorer. Just drag and drop the songs you want. Shakers are compatible with Windows XP, and require Windows Media Player 10 or later.
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