I agree that Super Saver or Pound of Love might be enough to put those young ones off of yarn crafts for life. I would say the same thing about Peaches & Cream, though. It's what I learned to crochet potholders and things with when I was in that age bracket, but knitting is so much more stretch-dependent, especially for beginners.
If you have Hobby Lobby in your area, their house cheap yarn called I Love This Yarn is around the same price range as Super Saver but a much nicer/softer yarn with decent stretch for an acrylic. You can order Hobby Lobby products at www.craftsetc.com, as well, and it's about $1.90 per 355 yard skein. Otherwise, I would second the notion of Caron Simply Soft, which I happen to think is the most knitting-newbie friendly of the inexpensive acrylic yarns, and absolutely has the best assortment of colors.