I installed this on the girls' laptop and they love it. It has some Flash games and is a child-filtered portal to Youtube clips (strictly stuff like dancing pets, Taylor Swift, etc). My only complaint is they're purely ad-based, but no worse than the commercials they have to sit through during television shows or through the intro of Disney movies.
My kids surf the net using KidZui. It is actually an awesome little application. Parental controls, weekly reports of activity emailed to your inbox, and it restricts content based on the age of the child, up to age 14. I would never dream of letting my kids surf on anything but KidZui. And to top all that awesomeness, it's free to download.
Here ya go! http://www.kidzui.com/
I have yet to actually use this myself (my seven year old doesn't yet use a computer at home but we were thinking of wiping the laptop for him soon) but http://www.kidzui.com/ is something we were looking into. Then we could just password protect anything that wasn't the browser, I would think.
Thanks for all the feedback. Yes I will be locking down his PC both by using DNS and I will be installing http://www.kidzui.com/ for a lot of his browsing habits. I will also be installing chrome, and some parental software to make sure he stays safe.
I use kidzui for my 7 year old. It has kid safe games and web sites. From what I understand all the content is approved by humans. They also send you reports showing the sites visited, search terms, and the like.