I was in the same position as you last Christmas AndyS. My son was 5 then (now 6), and wanted a buggy to be like his big brother who races a B4 at Bury Metro & NW regionals.
I gave it lots of thought, and eventually bought a Tamiya Super Fighter G for about £65.00. It comes with ESC and silver can motor. I dropped in some of my old radio gear and bought 2 packs of 1700 nicads for about £10.00 each. The kit was excellent, as you would expect from Tamiya and the car has proved to be tons of fun and very tough!!
He's thrashed it round the garden, in the park, on a gravel car park, and has even driven at Bury Metro after the racing has finished. His control has come on brilliantly - but the main thing is he absolutely loves it!!