My advice would be to give them a simple-to-play electric guitar instead of an acoustic. My parents gave me an acoustic and it was too difficult to play when I was 5. I had a guitar teacher and his electric was much easier to play, but my parents didn't want to buy me yet another guitar when I wouldn't play my acoustic.

I didn't start playing again until I was 18.

I think it's good to introduce kids to different musical instruments at a young age. Let them pretend to play and explore the sounds each instrument makes. Pretty tough to teach a 5 year old how to play guitar. Kids around 8 to 10 are at the right age to start. My kids both had guitars when they were 5, but I didn't try to teach them much on it, only how to copy me and to pretend to play along with me. I would tune them in open tunings and they would stum open. Then they would learn to stum a rhythm and make up words.

Here's a video example of my youngest daughter jamming away:
Hannah Sings Sweet Emotion

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