I was looking for a "starter computer" for my 5 year old daughter and decided to purchase a used iMac. I ended up buying a 500Mhz G3 DV SE iMac (Graphite). Also purchased a new internal battery ($5.00), an upgrade to 512 Megs of RAM ($35) and OS 10.3 on CD ($50.) All in, I spent less than $200 on the entire system. Anyway, I set it all up this past weekend and was very impressed with the performance in OS X. Safari, some educational games, etc all worked very well.
Just thought I'd share my experiences seeing as how it's back to school season and others might be looking for a decent 2nd or 3rd computer for the students in their household without spending a lot of money. I think these machines are a very good value for money and suit most students needs perfectly. Word processing, E-Mail, iTunes, Safari, even some iMove work can all be handled well by this 5+ year old computer...