This raises lots of issues. Why did they choose a license that is explicitly not for software? Why doesn't Debian feel that the by-sa license doesn't fit their Social Contract and is this a reasonable position? What would the GPL work in this case, particularly regarding what counts as access to the source? Should their application make the terms under which kids are submitting their work clearer to kids? If everything is supposed to use an attribution license, shouldn't the system specifically prompt you to give attribution when you re-use code?
Ultimately, while IANAL, I have a strong suspicion that at least in the US, while anything a minor creates is automatically copyrighted, he or she probably doesn't have the legal authority to waive that right and license their own work under a Creative Commons license without a parent also signing. It is possible (I don't know if it is wise) to gloss over these issues when you're looking at one degree of separation (kid uploads project to your site). But it is definitely the kind of thing which throws a monkey wrench into more serious redistribution (package these projects with your Linux distribution). It will be interesting to see how these things play out, particularly as OLPC spreads in the field.
I hate to suggest a new license, but it does seem possible that there is a place for a kid and parent readable free software license, particularly one aimed at Python and Squeak applications where applications are more or less distributed in source form.
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