Does this come as a complete package with monitor/keyboard. If so it's an absolute steal. If not then it's still a bargain. We tend to think in terms of masses of ram, mega graphics cards and huge HD's 'cause thats what modern games demand but if you're looking for a general purpose pc then this would be more than adequate. Do the kids have a camcorder? If so they might get into video editing in the near future which would be this machines only draw-back so far as I can tell.
FT, as a Dell it will almost certainly come with Win7 pre-loaded but you do make an interesting point. I've got a couple of friends who have bought Toshiba laptops in the recent past that were preloaded with MS Windows O/S and a whole heap of garbage proclaiming the wonders of Toshiba and this that and the other on start up and have managed to get themselves into a big pickle by not doing updates, installing aps off the internet which would further confuse things, etc, etc.