My five year old is getting one for Christmas
About the quality...
My five year old actually already has a digital camera.. a batman one. The quality is terrible. The flash never goes off, he has to wait for two beeps, otherwise we get a blur of a photo, as he whips his camera down. And you can't review the photo. So, we're upgrading.
That said.. he loves it every time we upload HIS photos to the computer. He doesn't care at all that they are blurry. He giggles at photos of the floor he took. He just doesn't care. I think the durablity is more important than quality at this age. Even with a great camera, he's only five, and is still just going to want to take photos of his stuffed animals and the floor.