Hi Christopher and John, thanks so much for the response. It's helpful to hear your thoughts, as well as your own experiences, and your son's, with guitar. I think I am going to take your advice, combined with what a local guitar store employee told me, and buy I real (non-toy) ukulele. The half-size guitars still seem a bit big for his arms. Decent ukes seem to start at about $65 which is is not a huge commitment as long as we teach him to take care of it; if it survives, my daughter can play it too when she's older.

Meanwhile, I think I'll pick up a keyboard to have around the house. I'd be happy if he played anything - I just want music making to be part of the family life.

Thanks again for your input.