kids can handle gears no problem at that age. Grip shift can be a little tough to manange, tho.
I've gotten my boys frames that are designed for growth: they are fairly small, with a long seat post, and a long enough top tube that by the time you run out of seat post the frame length is too small.
I'd encourge at least a hybrid, if not a mountain or even a trials type bike ( hmm, he might need two) if he's the kind of kid that likes to play around in the dirt park, do jumps anything like that.
Irulan