Way too any intro electronic "experiments" are either underwhelming (I lit an LED!) or black box magic (Build a radio transmitter by following these 37 simple steps! The following paragraph explains how the circuit works...). So I sympathize with the original request. Personally, I think the trick is to use a low end microcontroller and some cool I/O, and get the kids doing some simple, minimal programming so that they feel ownership. The best answer to this used to be a Basic Stamp, but the cost is prohibitive. Doing this on a budget today, I'd probably get some low-end 8-pin PIC, some switches and lights, and a cheap servo motor (one of the sub $4 HXT ones from HobbyCity). Then I'd have the kids share a few PC's loaded with MPLAB (free) and maybe a cheap Basic or C compiler (there are free ones). Finally, you'll need a cheap programmer (a PICKIT 2 or a third party one). It's a bit more work, but that's enough for the kids to do some really cool stuff. The goal here should be to give the kids tools so that they can be confident enough to go off and make their own cool stuff. To get the flavor of some of these ideas, check out: http://aggregate.org/hankd/piaee12.pdf

MERL's DiamondTouch has been on sale for over a year! Not only is it a large multitouch interface, it's the only one that can tell who is touching where! (That's kind of critical if you want to let people use different tools at the same time.) Check out http://youtube.com/watch?v=t35HXAjNW6s for a video of DT in action..