In my travels as an entrepreneur and advisor to start ups I talk with a lot of people about app ideas.
Recently I've noticed a big increase in the number of startups doing children's app development. Both creating interactive books, as well as developing general entertainment apps.
The rise of Angry Birds in the last year and half created a new mobile app gold rush focusing on kids. Entrepreneurs watched kids play with their parents iPads and discarded iPhone 3Gs and think there's gold in the hills. There might be, but it won't be easy to dig out.
Angry Birds suits itself nicely to the kids because the game mechanics are simple, the character development is great and most importantly (for parents) it takes a long time to play. Those are the same reasons that adults like it.
But just because lots of kids like it, doesn't mean they'll like any app on a touch screen.
Developing apps for kids is just as hard as developing them for a wider audience. You have to spend time marketing (to parents as well as the kids themselves). You have to figure out monetization (paid vs. ad supported vs. virtual goods). And you have to create a good, sticky product.
So while I suspect there will be a few winners, there are going to be lots of folks languishing at the bottom of the app store not making any $$$. Are you going to be one of them?