Just about any sports game will probably be enthusiatically received. Madden 2006, NBA 2006, NHL 2006 or MLB 2006, depending on your nephew's interests.
Kingdom Hearts is also great if your nephew likes role-playing games and Disney. It's rated E but there is some cartoon violence in it (no blood or gore, but you do carry & use a weapon).
Racing games are good but certain ones are just plain nasty...avoid Vice City. Need for Speed is okay for 10+. Crash Team Racing is pretty funny and definitely G-rated.
Guitar Hero is supposed to be really hot with the teenage boys but it really needs the guitar controller to be cool.