For the Kinect - Child of Eden. The ONLY game I've ever given a perfect score to in 10 years of reviewing games.
Any of the Rock Band / Guitar Hero games are GREAT fun for kids. Same with the Lego games.
Saints Row series is awesome, as is GTA IV, but definitely not for kids.
As to FPS I really enjoy COD:BOII and BF3 online, even if you have to mute everyone. Far Cry III is a lot of fun too (although I've not played that online).