Robo Rally would be a great place to start teaching programming basics (i.e. programming steps and timing.)
Earliest computer/electronic experiment that really struck me as a kid (1st or 2nd grade) was 'decoding' circuits with a logic probe: we had rectangles of construction paper, half of which had two rows of hole-punched holes on opposite ends, and we taped tin foil paths between them, including bogus foil under the 'dead' holes. After making a half dozen of these each, we traded and logic probed someone else's circuits. Lots of fun!
Space Combat (by Laminar Research, makers of X-Plane)
Plenty of great "couch co-op" games on PC.
Recently I've played:
A Virus Named Tom
Trine 2
Rayman Origins
Portal 2
Magicka
Dungeon Defenders
Disney Universe (we've got a 3yo in the house!)
Its not like they can take Mario and make a FPS, although that could be hilarious. Super Mario Bros meets GoldenEye.
Dunno about that, but I thought the Paper Mario games were terrific!
A penny saved is a penny to squander. -- Ambrose Bierce