For your lad I would recommend:
Little Big Planet (Not only fun to play, but also challenges his creativity through the in game level and set design tools)
Ratchet and Clank (any of them) While there is combat, it is kid friendly if you get my meaning.
I have a Logitech FF USB steering wheel that was designed for the PS2, but it works well with the PS3. Need for Speed Shift and Dirt 2 worked well with this wheel.
Burnout Paradise is a game you will both enjoy.
Any of the Lego games have been a big hit with a lot of kids (Lego Star Wars, Lego Indiana Jones, Lego Batman)
Most of the titles I mentioned are back catalogue now so you should be able to pick them up cheep.
Also keep an eye out in the Playstation Store. They have specials all the time and many games there are value for money. (Although I do recommend that you check out web sites like ign.com
for reviews before you part with your hard earned
If I think of any more I will post them