There was a good article on the value of teaching kids chess in the New York Times today. Entitled "Low-Cost Workouts for Young Minds", the article reviews the resurgence of chess as parents try to find activities that stimulate in a way that video games and movies do not. Chess, like sports, helps teach kids to focus and to face difficulty without giving up.
I taught chess to my daughter at age five, and she had no trouble learning the moves of all the pieces. To get her going, I just bought a very inexpensive $9.99 wooden chess set, which was a fantastic deal. The board is a good size and solid—don't get a cheap cardboard folding board. And the pieces are big enough to be recognizable and hard to knock over. You can find cute variations on the chess theme, with little m&m size pieces and cloth boards that make nice looking gifts, but are not up to the game. Kids, especially, need to be able to see the pieces clearly (big) to remember what they all do and keep their functions clear. They also need to be able to see them lined up on the side of the board as the game progresses and daddy finally looks like he might lose a game.
Now is also the time you might want to consider enrolling in chess camp in the summer. Chess camp usually is a mixture of regular camp activities with some time focused on learning the game. Some kids love it.