Create something for the inevitable Zombie outbreak... we still need a couple more apps for that.

-Consistent Interface (Windows 8 will probably change that)
-No massive Dock to take up valuable space
-Good backwards compatibility (Pretty fed up with OS X Lion breaking things here and there)
-Well supported
-No fumbling around with package managers and incompatible installers
-Driver support
-Relatively bug free
-Applications which run on it

There may be a couple more, Mac OS comes in second place while Linux Distros change too frequently for me to bother choosing one (I used to like Ubuntu until Unity). For Servers on the other hand, Linux is awesome.

You and your fancy registers, I use a specially trained hamster to push buttons depending on the bits it sees on an LED board. And the hamster only taps the buttons in the correct way if fed the correct combination of grains!

Although I am having my suspicions that the little bugger is selling information to the north korean hamsters...

Leaving a clean copy of XP would be my suggestion since you already have the licenses and I reckon the Hardware itself will not likely survive another 2 years (They are Kids after all). But then again that would be too easy so here is another suggestion: Install OpenBSD to provide a solid foundation On top of that install Ubuntu (for an easy to use Linux distro) in VirtualBox, On top of that copy of Ubuntu install Windows XP if the kids need it to run their games In that virtual instance of XP get Firefox to point to jslinux so the kids have something to tinker with if the hardware is not enough spend some money for some more RAM