I found a good deal on a Sharp SD-HX500 system for his birthday.
It's a digital amp and dvd/cd/sacd/dvda player in a two piece set.
We mounted it on his wall - it came with brackets.
Audioquest speaker cables I had laying around, connecting to a pair of
Acoustic Energy Aegis Evo Ones.
Sounds pretty darn good.
We're going to set it up for him to play his iPod through one of the analog inputs.
The speakers are on a shelf, high on the wall, almost directly against the wall.
Problem is they are rear ported, so it gets a little boomy mounted that way.
I think we'll keep an eye out for a small bookshelf speaker kit (either sealed or front ported)
that we can build together.
He is eleven, so this should set him up through his teen years
Plus later on he can connect the Sharp to a TV - it's also a DVD player and the amp can do 5 channels.