When sewing with kids, it's best to have a large variety of fabrics for them to choose from. Often, they don't choose by look, but rather by feel. I also find that using fabrics that don't fray are perfect for first-time sewers.
*Felt - we use a lot of felt! For this reason, I typically buy the cheap felt by the yard or a variety of felt squares.
*Fleece - kids love fleece - it's so soft, great colors and prints. The main problem with fleece is that it can be too thick to sew for some kids.
*Flannel - I just started using flannel this year. It's been great to work with - good feel, doesn't ravel too bad, easy to sew, and comes in a variety of prints.
*Muslin - the blank slate provided by muslin is so great for kids. I love how they create their own fabric designs by using markers and crayons. We use muslin for all sorts of projects during the school year. I find that by backing it with felt, the edges don't unravel as much.
*Cotton - I tend to buy cheap fabrics for kids - it took me awhile to not freak out every time a kid makes a "dress" out of a new yard of fabric by wrapping it around herself and then stapling the corners. I also thrift and yard sale a lot of fabrics. Linens are great for this!
Please add your own fabric ideas to the comments section - often times it's the fabric that draws kids into sewing. This year, I bought a lot of camo and animal print fabrics to entice young sewers!
photo by Justin Fox Burks