OP - I can only speak to the Xbox one because that is the only console I own (I somewhat regret it because all the titles I want seem to be also available on pc, but XB1 is a nice system regardless). There are several games that your kid would probably enjoy watching and which I think are age appropriate for my five year old.
Examples:
Peggle 2
Max the curse of brotherhood
Rayman
Any of the sports games (FIFA, NBA2K14, Forza)
Trials fusion
Plants vs Zombies
Lego Movie
Lego Hobbit
Lego Marvel Superheroes
Kinect Sports rivals
For anything that is remotely violent I spend quite a bit of time explaining to my son the difference between reality and make believe. It never ceases to surprise me how much that needs to be explained to a 5 year old. And it was needed even more when my son was younger. My wife and I also strictly limit his screen time because we want him to live an active, healthy and "traditional" kid lifestyle. He gets maybe 15 minutes of screen time on most weekdays, usually right before bed. On weekends we let him watch some cartoons in the morning and play games for 30 minutes. Never any more.
Not that gaming is per se unhealthy. I firmly believe that it is not. I grew up gaming and I love it to this day (I've 37). But I will say that there is a noticeable difference between the behavior of my son (and his friends who also have limited screen time) and the behavior of children in my son's class who watch a lot of television, video games, etc. every day. In particular there is a marked difference in attention span. I don't have clinical proof of course, but having seen the difference often enough I honestly believe there is a link. So . . . be careful. Gaming is a fun way to bond with your kid. Just be wary of it replacing good old fashioned father/son interaction and other more natural activities (i.e., those humans have been doing for millions of years).
PS. - I also have a 2 year old daughter. We limit her screen time in the same manner as our son. Not sure whether all of the above games would be suitable for her. I would probably limit to Peggle and plants v zombies.
PS2 - If the goal is to play games with your kid, WiU is probably the way to go. Or even the good ol fashioned Wii. There are tons of fun games on the Wii that would be fine for your kid to watch you play. And you would probably like those titles as well.