What do you want them to do on it?
If you want them to be able to play games that you can buy in the shops for PC, then go for Windows XP.
However, if they're young, or if they have a playstation or something for games, and the laptops are for typing and browsing the web and listening to music or watching videos, then take a good looke into Ubuntu:
http://www.ubuntu.com/
It's a free system (with free upgrades too) that's more secure than Windows is, with less problems (once set up), and is more stable. It comes with an office suite (like Microsoft Office), browser, email client, etc. Very good, and very popular.
And, if they're quite young, you can get a variety of Ubuntu called Edubuntu, which is more or less the same but more kid-friendly, with lots of learning games and things (I'm thinking ages 6 or so...):
http://www.edubuntu.org/