I did some work last year with MS kids both in my IT class and with other teachers in their content classes. I've had good experiences with the following:
Sketch-up is a great FREE program for grades 6-8, as well as Alice and Scratch (for preprogramming). I teach K-5, so they're a bit of a stretch for my students sadly. I am going to try Scratch with them if I have time this year.
I am looking for any and everything--as long as it is free. We are putting together a push for more Web 2.0 tools and It helps to get people excited when I can give them tangible examples of success stories.
I've really been adding a ton of Web 2.0 stuff into my curriculum over the last year. In 8th grade, the following things have worked really well:
Glogster (online, interactive, multimedia posters)
Google Maps (create your own maps, with pin points, lines, regions, etc)
Prezi (presentations using cool transitions. No slides, all on one canvas)
ToonDoo (create cartoons online, can make a "book" of them)
Google Sites (for e-portfolios)
bubbl.us (an online Inspiration type application. Use bubbles to make webs, etc)
I've also had my students use Museum Box, but found that there were some glitches. Not sure if that was on our end or on theirs. It's a great idea, not sure if I'll try to use it with my students again).