You can't stream music or movies with any programs that I've ever seen or heard of for the iPhone except Remote and that's just music.
You could use Handbrake (free open source DVD -> iPhone program) to put them on the iPhone and then play them on there. In addition to movies, there's plenty of good games in the AppStore which are good for entertaining kids. My daughter plays Solitaire and Labriynth for hours on end.