I can actually answer this from a teenagers point of view, considering that I got a cell phone plan in Oct 2003, when I was 13 ½
The reason my parents got this for me was :
1) I had a lot of extra-cirriculars (Studen Govt., Sports, Clubs, etc) and since there isn't a bus system at my school, I needed to call them to get a ride
2) I go out with friends a lot, and my mom loves how she can keep track of where I am, whom I'm with, etc.
Basically, it boils down to two things : Responsibility and If they're going to use it
I have friends who got cell phones in 7th grade (7th!! WHEN THEY WERE 12 YEARS OLD!) who keep losing/breaking their phones. I see them with a new model almost every 4 months, which obviously costs money. It's different if something happens to the battery withing the warranty phase (like it happened to mine). My parents paid $0 to have it replaced, so it was okay with them.
Also, I have friends who got video/camera phones who do nothing BUT THAT! I sometimes look at their phone, and sometimes, look at their call log. I know someone who had a phone since April, and has only talked on it for a total of 4 hours! That's only 240 minutes, which is how many anytime I use in a MONTH!
I guess I should say: Go ahead and get the pre-paid for them. Get a phone that DOESN'T HAVE all the bells and whistles (i.e. no camera, no video)
I think a color screen would be okay, just because they are becoming more and more ubiquitous (I remember I paid $20 out of my own pocket to get a color screen, even though camera was only $30 more)
EDIT: Oh, I forgot! Get a service that had good coverage (Verizon Prepaid, Cingular Prepaid), so that they can't say "Oh, no reception" or "Phone didn't ring"
Also, make sure the phone is at least ½ charged when they leave