As someone who's also been roped into the "teach game development" trap, my advice is to stay the heck away from programming and 3D and any other component that requires specialized skills. If you want the kids to actually finish something, then do what you can to make that happen. Not all of them will be programmers or artists, and you don't want to spend all your time teaching those skills. Plus, it's also pretty common for those that can't program (or model) very well to have really huge ideas that far outstrip their ability to actually deliver - which translates into never finishing.
And to that end, my recommendation is GameMaker, from http://yoyogames.com/ There's a free version, it runs on PC and Mac, it's friendly to non-programmers and programmers alike, and easy to use. Tons of free resources available as well (from good to bad).
If you DO want to move up to the higher production gaming style, consider modding. You can pick up a copy of FarCry for DIRT CHEAP, and it's a very modable game engine with lots of good documentation. Or consider modding Valve's Source (Half-Life 2) engine.