Research FUSE Labs - Kodu Game Lab. An overview of Kodu.
(Click to play) Kodu lets kids create games on the PC and Xbox via a simple visual programming language. Kodu can be used to teach creativity, problem solving, storytelling, as well as programming. Anyone can use Kodu to make a game, young children as well as adults with no design or programming skills. Abigayl's Interactive Tutorials (Part 1) on Stencylpedia.
Scratch. STOP PRESS: A new version of Scratch, Scratch version 2, was released in May 2013.
You should of course use the latest version. The new version is available for online use and also for download as a beta version. You can try the online version HERE. The new version includes some new features such as procedures (make your own bricks), the possibility of cloning sprites (such as bullets) while your program is running, the possibility of using 'vector graphics' to make sprites and a sound editor. Introduction to Game Production in Scratch.