I recently bought a Nikon D70. Here are my thoughts:
-A dvd burner is a must!!
-A Dsl or cable connection for uploading or emailing pictures is another must.
-Get the e-mail address of the kids parents at the begining of the year. Everyone except the local professional photographer appreciates a free high quality jpeg
-Don't buy the digital only lens, buy the film lens version. I question how long the current chip size will be around.
-Buy your lens off of ebay. However you must be patient/careful so that you don't overpay or buy a damaged item. You can buy older lens made of actual glass and metal rather then the current all plastic models, I bought a Nikon 75-300(?) lens in pristine condition for $155 (new it was $600) Its made of glass and metal and survied my car driving over it. The current "new version" of this lens sells for about the same price ($150), isn't bad optically, but don't drop it!
-Don't spend too much money on a printer because you can mail order or download your prints at various places that all use the latest Kodak or Fuji development equipment. i.e. take your DVD to costco for 19 cents you can get great prints. I aslo use Adorama
http://www1.adoramapix.com to process my prints and share. I like the quality of their service and the online edit tools are much better then costco etc. For what its worth, I often read professional photograghers will take their images to costco for processing.
-You generally won't get great photos from your new camera instantly. i found that it took 500+ photos to get a feel for the options and abiltiy of the equipment. I.e. my 70-300 lens is not very sharp at 300mm but is very sharp at 270mm.
-Make sure you tweek your camera settings before taking photos. There's nothing worse then a really bad white balance or ISO setting requiring you to edit every single photo on your computer!
-Buy at least a 1 gigabyte card.