Spoiling him? Depends how he rides, I wouldn't hesitate if miniKen needed a full size bike, much better than forking out for a PS3, and they go outside on them too.
I don't see the point in old retro bikes for kids such as the 24" wheel Zaskar, mainly because bike developement and trails have moved on a bit since then, and the Zaskar was only a scaled down adult bike with old school geometry. Newer kids bikes such as the Specialized are more designed with young riders in mind.
The Specialized A1 FSR kids bike is rather decent with suspension spring rates and geometry designed for kids, inspiring more confidence and comfort.