Lambda the Ultimate notes that Etoys is an important part of the OLPC initiative:

The Etoys end-user programming environment is becoming tremendously important because of its inclusion with the One Laptop Per Child XO . Etoys was invented by Alan Kay's research group and is in continuous development and use as an integrated feature of Squeak Smalltalk. The Squeak/Etoys community includes lots of researchers, programmers, teachers, and kids around the world.

I've used Etoys to teach Smalltalk - it's a great way to get concepts across to kids.

Have a look here as well.

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