Major problem with that: Phones without SIMs can still make emergency calls (911, etc).

I got one for my kid as a camera. Why? Because it costs as much as many kids cameras, while they're absolute trash, and the camera module/software in the iPod takes really high quality photos that are easy to export or manipulate.

Old iPhones are inexpensive, but you cannot disable emergency calling for a good reason, but that good reason still doesn't make you want to hand one to a 7-year-old as a glorified camera.