Many teachers and parents already use Starfall.com for reading activities for beginning readers. I just ran across pbskids.org and kbears.com (knowledge bears) that seem to engage children, as well.
I must say I am still disappointed I can't find anything that I feel would justify using it in the classroom -- I'm all about making the most out of whatever time we have, and the internet programs I find seem to spend too much time getting to the purpose of their activities. But the best way to tell, of course, is to use these sites with children, and that I haven't done, yet. More later...