Crayola digital camera for kids
Its relatively poor quality -- 8MB of storage, 640x480 resolution, etc. -- have earned it some poor reviews -- but this looks like a fun way to introduce a 7-year old to photography in a format that's more user-friendly than the higher-end products.
For $58.64, you can get the camera with scrapbooking kit.
Kids need to be more creative and any reasonably-priced gift item that might encourage that gets high praise from me.