If you get him another beginner guitar, he'll just out grow that in a few months...I say rather get him a nice effects pedal...(I would have said a multi-effects unit at his age, but now i'd say get him a really nice distortion...he'll thank you one day...) and send him on his way.
Personally, I have bought all my guitars myself, my parents never bought me a guitar, and I like to think Ilove all my instruments so much more for it...he'll be wanting a better guitar in the next year anyway, rather he saves up for a while and buys himself something nicer to play through his killer pedal that he got for christmas.
[FONT=Century Gothic]Hope is when we feel the pain that makes us try again[/FONT]