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MAKE pal Steve Lodefink posted the details on a couple of kid parties he's thrown centered on building and flying soda bottle rockets. When my son was little, he really wanted to have an Estes rocket party, but we thought it was probably too dangerous for 6-7 year old kids (even with close supervision). Doing water rockets is a much better idea. All of the rockety fun, minus the gunpowder and serious combustibility (although you'll want to have a healthy respect for the power of the slightly more benign projectiles used here).
Water Rocket Party - Link
From the pages of MAKE:
Soda Bottle Rocket. You don't have to be Burt Rutan to start your own rocket program. With a few empty soda bottles and some PVC pipe, you can build a high-performance water rocket. MAKE 05 - Page 78
