This is kind of neat: Apple has released a number of Sesame Street videos for free through iTunes. If you know a young'un, they could make for a fun little gift. You should be able to burn them to a DVD as well so that they're not confined to your computer or iPod. You do need to have iTunes to get to them, though. The program is free and can be acquired here if you don't already have it. Click on this link and you'll be sent to the area on iTunes where the videos are held.
[Edit: Apparently you can't burn these to a DVD due to copy protection. However, once the Apple TV is finally released, you can use that to send any movie from iTunes to your television. It'll pay off over time :)]
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