Well, the kids loved playing around with Kodu, especially Nicholas (7) and Alexandre (6).
The interface left a little to be desired--it seems far from intuitive for a kid and maneuvering between items was a bit difficult. They've also abstracted the file saving and loading to such an extent that it's sometimes difficult to tell if you're saving over the project you started with, saving in a new place, continuing your last session, etc.
The kids did have a lot of fun with it though, and were able to take the initial game and play around with it quite a bit. I was able to leave them playing around with it on their own for a while, and when I came back, they had Kodu making sounds when certain keys were hit, saying speech bubbles when other keys were hit, and jumping when you hit the spacebar.
One caveat, it takes more horsepower to run than my Eee PC can reliably deliver. The first "Shooting Fish" game worked okay, but once we got into some of the later ones with varying terrain, the machine tanks and the games become so choppy as to be unplayable.
All in all though, a big success. It's nice to see the kids using the computer and not just vegging out playing a game. This is a much more active use of computer time, and they really took to being able to see their results immediately.