Re: 1st guitar for 10 year old
After buying and rebuilding/customizing a used US made Peavey for very little more, I wouldn't dream of buying a Squire. The guitar cost me $60. I could have had it playing perfectly, and sounding pretty good (no worse than a Squire, maybe better - I didn't play with the stock pups much) for a grand total pretty equivalent of a new Squire. It still would have looked hideous, but at ten years old there's a good chance he would put stickers all over it, too.
You may be opposed to getting him something used for a gift - I'd struggle with it, too - but it won't decrease in value like that Squire will. He'll be able to get next to nothing for it if he decides he likes guitar and wants a better one. Same for you, if he decides he hates guitar and gives it back to you. Even with a MIM Fender, you'll be able to get more money out of it down the road.
BUT, a Squire is definitely better than nothing. With a little work, they're playable guitars, too. However, like Pecan said, he may not like the Squire (neck shape, etc.) and might prefer the feel of an OLP or a Jackson in a similar price range. That's the difficulty with surprising a beginner with a guitar.
If he's musically inclined, you could probably teach him a few chords or an easy song pretty quick and then help him find the one that is most comfortable. Maybe you can get him a gift certificate to the guitar store and tell him you'll help him pick it out. He may want red instead of black, too.
I get asked this question all the time. 
