Between my 4 kids we have 12 webkinz. It is very popular here and kids in my daughter's 5th grade class love them as well (10 -11 year olds). When you register them, a picture of your pet and it's name appear in your account. You can also print out a birth certificate. You can make movies starring your pet. You feed it and buy it accessories. You also build a house for it and add rooms and furnish the rooms. There are alot of games to play and some are educational (math, typing, etc.), but most are just for fun. You can invite others over to play at your house and you can play interactive games against your friends as well. There is no "chat" function, so it is a very safe site.
I don't think they realized how popular their site would be and had to bring the site down to do numerous upgrades. We had trouble getting in, but it has been fine the last few days.
It's a great gift considering that it's only $10 - $11.
They are not sold in toy stores, but you can find them in Hallmark stores and specialty gift stores.