Tux Paint is an open source, cross-platform kids' painting program. As you can see above it has a simplified (and definitely not Mac-like) interface. You can do the normal sorts of things you would expect (draw with lines, shapes, etc.), but one feature that the kids really like (according to the official TUAW kid testers) is the availability of "rubber stamps." These are basically pre-made shapes / images that you can stamp on the canvas (like the penguin to the right of "TUAW"). It only comes with a few, but there is a separate stamps package you can download to get "hundreds" more. In addition, the features list includes several "Magic" (i.e. special effects) tools like "Grass," "Bricks," and more. As you use the tools there are a variety of sound effects as well (squeaking erasers, etc.). Although, it's definitely not the most Mac-like program in the world, you can't complain about the price and looks like it could keep the kids occupied for a while. And yes, I am trying to blind you with this screenshot!
Tux Paint is a free download (for OS X, Windows, various Linux flavors and more).