I'm on a quest to find a good free OS to put on a beater laptop for the baby (15 months, obsessed with computers!) to play with. Sugar is a little too old for her, I think. I described it in my podcast some time ago — easy UI, lots of cool sounds, BabySmash-style keyboard mappings, easy access to bookmarked, downloaded YouTube videos, etc.
Qimo looks like it's in the right ballpark — anyone else got a good "BabyBuntu?"
Qimo is a desktop operating system designed for kids. Based on the open source Ubuntu Linux desktop, Qimo comes pre-installed with educational games for children aged 3 and up. Qimo's interface has been designed to be intuitive and easy to use, providing large icons for all installed games, so that even the youngest users have no trouble selecting the activity they want.