Another thought for younger children: Finger knitting! It doesn’t require any needles and will teach them the basic construction of knitted stitches, how they interlock, etc. Then when they’re ready for needles, they’ll have an idea of the very, very basics. And it will give them something to do when you’re knitting!
If you Google “finger knitting”, you get several sites. Here’s a link to one that I liked: http://www.yarnlady.com/newsletter/2005/endaugust2.htm. While their pictures show the teacher using a rather slender, I think a nice chunky yarn would work better. Even a fun fur yarn, maybe?