Starfall.com was a favorite from the time both of them could reach the computer I think although they are getting a bit old for it now.

Nick Jr, Disney kids, Bubblebox (with adult monitoring!), Kongregate (also with adult monitoring!), yahoo.com for email (the older one) and a bunch of science sites that I send them too.

They are currently 5 and 7 and both have access to all those sites. The seven year old knows how to use google for searches too.