I bought one of these recently for a six year old:
http://www.ebay.com.au/itm/141279803967
Unfortunately it has serious intonation issues. At the octave fret, it's almost a semitone sharp. Therefore not recommended. If they redesigned it with a moveable bridge, it would work well.

I sold about 50 Seagulls when I had my store, The tone was amazing for the money. But , the necks are a bit clunky. So we like the Art & Luthier made by the same people because it has great tone and a better neck. I have the Folk model, For the money it's a great guitar..but the Mini GS Taylor is all I play now , it was about double the price however..  

Most learning guitarists will stop playing because of lack of callouses, so an electric would be an easier start for someone desiring to learn. If shy, an electric also makes less noise if unplugged (this is actually a selling point to people (usually adults) who want to learn without others hearing). Fret action will probably be the biggest hurdle in the beginning for him.
 
15 years ago I was in the same boat with my kids and after feedback on a newsgroup got a Kramer Focus 111s. It was $64, and came in a cardboard box, so I assumed it was a hunk of junk. Then I got the surprise of my life... perfect intonation from the factory, just the pickups had been recessed for shipping. I believe Gibson purchased them a few years later and they have since "disappeared." It is the only Strat-style guitar I own, so has gotten more use from me than the kids.
 
As far as an electric, something that is fully adjustable in the bridge (for intonation and string height) is recommended, just in case it is not properly adjusted at time of purchase. As far as the left/right hand thing... since he does not play yet, he can learn either way without issues. Learning right-handed would make it easier to learn music, as most is written for this, but is ultimately a personal choice (no right or wrong, just more convenient). Taking him to a good store with a big selection and letting him try things for feel is definitely worth considering.

I bought my 8yr. old daughter a Yamaha nylon string guitar (junior) for her last years Christmas gift. Eventhough it's a bit harder to learn for a beginner, (me being from the old school mentality) I figured if she can go through the initial rough stages and then gets comfortable playing this, she can easily play any other guitar. This actually worked as she has persevered through that rough stage and now is practicing/playing on a daily basis (all on her own will).
 
Anyway, I played that little guitar at Guitar Center and checked out all the other ones.......finally decided on this one for its playability/tone and of course the price (I think it was around $125). 

Thanks for all the recommendations.  I talked to my buddy and he was leaning acoustic because he thought you needed the amp and cable along with the electric.  I pointed out that it wasn't the case.  We'll be looking at both electrics and acoustics.  It is clear that if we buy any of the inexpensive ones, a good set up and good strings will be essential.
 
More to come over the work break between X-mas and New Years when I get to do some research at the guitar store.

dwardzala
I talked to my buddy and he was leaning acoustic because he thought you needed the amp and cable along with the electric.

You do need some sort of amp with an electric if you want it sound like a guitar, and a cable to connect them.
Playing without one may be ok for practicing your technique and not disturbing anyone but that's about it.
 
I'm sure there are some cheap amps that'll do in the beginning, or just use your powered computer speakers and whatever adapter might be needed to connect the guitar to them.  I wouldn't submit my child to headphone use so I wouldn't go for the tiny amps that plug straight into the guitar, like the VOX.  Besides, I'm sure a kid would like other to hear as well.
 
We bought the VOX Pathfinder for my daughter, around 80$.  Works great and is loud enough for anything you'd want to do in a bedroom.
 
One thing about acoustics is that they'll play anywhere.
 

I actually have a practice amp that I can give him when the time is right.

So I took my buddy and his son to GC today.  The sales person was helpful.  We had him strum a Yammy JR1 acoustic (I like the tone of the JR1 better than the JR2 and its $30 cheaper) and move his fingers up and down frets both lefty and righty and he seemed to feel that righty was more comfortable.  Then we showed him an try a Fender Squire mini electric and he strummed that a little bit. They'll be back over at my house in a couple of weeks and he'll get to see some of my guitars again, so we'll get a good idea how serious he is (I think he is serious).
 
Of course, I am probably going to have to give him his first few lessons, so I'll be back asking for advice on that front when the time comes.
 
Thanks to all for the suggestions.

dwardzala
So I took my buddy and his son to GC today.  The sales person was helpful. 

I just couldn't get past this and needed a strong drink. 

Mesh

dwardzala
So I took my buddy and his son to GC today.  The sales person was helpful. 

I just couldn't get past this and needed a strong drink. 

Yeah, GC sales people get bashed a lot on here, so I thought it was only fair to point out a good experience.  Enjoy your drink - I am already.  Happy New Year!