For the youngest users, there are several ‘sandboxed’ environments from which to choose. I recently reviewed Zilladog appropriate for kids up to about 10-11 years of age, here is a review of the newly released (July 2009) Zoodles, which I’d say is appropriate for 3-7 year olds.
Zoodles has a friendly interface and includes a free browser, educational content, and games.
Parental monitoring tools are also available, but there is a fee associated with their use ($5.95/month or less).
I don’t know how necessary the monitoring tools will be to most parents given the sandboxed nature and age specific targeting of content. For a breakdown of features, here is Zoodles’ feature list.
Like similar sites, Zoodles’ browser only displays web pages that have been pre-approved, in this case by Zoodles educational team (including experts from Stanford University) to provide material “that is both educational in nature AND fun!”
In short, Zoodles provides plenty of functionality for the youngest kids where parents don’t need to worry about inappropriate content or contact. To learn more about Zoodles, watch their overview video at: http://www.zoodles.com/home/features#browser.