NavList:

Steve,

Do you  live in the US? If so, I recommend going to the Orion Telescope website ( http://www.telescope.com ). They have a great choice of entry level telescopes - click on the "beginner telescopes" tab. I agree that a refractor is a better choice than a  newtonian reflector. But if you don't mind the extra $,  you might want to consider a tabletop Makustov.  I just looked and they have a 60mm refractor for under $100, and a 90mm Maksutov tabletop scope for $300.  The latter is pricier, but if there are parents involved who might also do some viewing, it could be worth the extra $. Or consider a short focal-length refractor that can be used for wildlife/terrestrial viewing as well as sky stuff.

Other considerations:

- does the child live in an area with dark skies, or is it light-polluted? If the latter, I'd be reluctant to give them a sky-specific scope. 

- will they look exclusively at the sky?If yes, go for a long focal length refractor like the "Orion Observer 60mm altaz refractor).  

- will they want to do terrestrial viewing? Then go for a shorter focal length refractor, like their Travel Scope 70. The nice extra of it is that it comes with a backpack and shorter tripod. More versatile than the Observer, and can be used on a tabletop, but not optimized for sky viewing. but if all they look at is the moon and saturn, this scope is probably plenty. And bec of the shorter focal length, the scope has a bit wider view, so is good for open clusters like the pleiades.

- in this age of Hubble/Juno views on the web, it is important to set their expectations.  Except for lunar viewing, amateur telescopes basically turn tiny fuzzies into slightly bigger fuzzies.  Which is why most telescopes end up in a closet (a good case for a terrestrial-view scope). Navlist folks would all thrill at the subtle pleasures of photons from the orion nebula falling on their retinas, but normal people prefer seeing the view on the web.

- get a moon filter -- they will prob want to look at the moon first, but without a neutral density filter, it will not be a fun experience any time other than a very new crescent. 

- I'd find out if there is an astronomy club close to where the young'n lives. If you live nearby, take your grandson to one of their star parties.  The club members will trip all over themselves to let him have a wonderful viewing experience, and it will get him started thinking about the sky. You will be able to get some sense of where his interestst might lie and that will help with scope selection.

- rather than surprise your grandson with a scope, involve him in the process of choosing what will work best for him.

-consider binoculars rather than a telescope. More expensive than a scope and not as great for sky viewing, but great for hikes, etc. And include a good star guide -- if his parents have a tablet, etc, there are lots of great sky apps.

- and while you are at it, don't forget to show him how a sextant works!

-p