I'm sure everyone knows about the benefits of Dora the Explorer when it comes to teaching Spanish, but what about for teaching German? Over the past few years, when putting together my homeschool budget, I've allowed myself a small sum to purchase region 2 DVDs. These can only be played on a computer, or multi-region player, but the children love them.
I usually order through Amazon.de, because it's set up exactly like Amazon.com, which makes it easy to navigate, and takes some of the guess work out in the areas where my own German language skills run short. It's extremely easy to find the children's section for the DVDs and then search from there for the children's favorites.
I found Dora to be especially useful, because she repeats key words over and over, making it easy for the children to pick up. It's a little strange in the parts that are normally in Spanish - in the German versions, they are in English! Don't forget about the Teletubbies too. Their simple words make for easy and entertaining study. My older children have complained a little about my playing the baby shows for them, but they always end up watching them anyway. We particularly like the Christmas specials.
If your looking for free learning tools, check out nickjr.de or disney.de - where you can find many clips from shows, interactive stories, and games in German as well. Again, these sites are laid out very close to their English counterparts, making them fairly easy to navigate. Many German television shows can be found online too, for those with a little more advanced German skill. These can be a lot of fun, and provide a good source of accent training. Besides, if your little ones are going to watch cartoons anyway, why not add an extra level of learning to them? After all, it's great to be a homeschooler!