I still won't buy my kids portable game systems (they are 7, 10, 12). We have a Nintendo game cube and pc games. That is enough for them.
There are TONS of educational websites for kids. Starfall is a great one to teach literacy (I used it for 3 years when I taught kindergarten, plus with all of my kids, and they loved it!) and pbskids.org is other good source. And, I don't know about your area, but I got all sorts of educational, fun computer games for my kids from the library when they were younger (reader rabbit and jump start are two great ones, if they are still available and suitable for the new computers). Free, one week checkout, able to change regularly so little boredom, and no risk.