Internet by Age and Stage (from Commonsense media):
Age 2 to 6: Keep your kids away. There are some games that say they will make your kid smarter. So will playing outside, reading a book, or listening to music.
Ages 7-9: Some kids will want to start emailing. This is absolutely fine, although IM isn't a good idea for this age group, as IM buddies and buddy lists are too ungovernable. They might want to start Web surfing. If they do, use a filter or tell them where they can go with your supervision. Don't let kids this age into chat rooms, play online games, or download without you.
Ages 10-12: Children will begin to explore on their own for school and for fun. IMing comes into play here for the first time — more so for girls than for boys. The boys are going to wander more on the Internet finding gaming sites and sites with silly and often inappropriate content. Some kids may start experimenting with MySpace and other social networks. This is why they invented the word "no."
Ages 13-16: The floodgates open. Everything comes into play. It's entirely age-appropriate for this group to email, IM, surf the Web, download, and play games. But you have to make sure your kids know your rules. Also at this point, parents begin to lose control over where their kids use their computers. Trust comes into play. As for social networking sites, again, try to keep your kids off them until high school at the very earliest.
17+: By now, if they don't know the rules of safe and responsible conduct on the Web, there's little we can do. Developmentally, kids are independent. But remind kids that to stay safe, they need to keep personal information personal and use their powers of critical thinking before they believe everything they see and read on the Web.