Yay!, Bee, See
bsittler recently wrote some software for use by his daughter on her OLPC. It runs inside the Browse activity, either locally using a "file:" URI or over the network. He released the software to the public domain and packaged it along with scaled-down (1600x1200 or less) copies of some public-domain images and some copyrighted-but-free-to-redistribute images under GFDL, and various Creative Commons Attribution-Share Alike, Attribution, and Share Alike licenses. Individual attribution for each image is included in the application source code.
Overview
bsittler wrote some software using DHTML (JavaScript, HTML and CSS.) It's to help learn letters and numbers, and is intended to be used with adult supervision and involvement. It is fairly easy to customize it to use different images and support different alphabets simply by editing the contents of the <style> element in the HTML file.
The software is very, very, very simple — it just echoes typed letters and numbers in a large, colorful font and shows a somewhat-relevant background image for each one. The images are various freely-usable ones found on Wikipedia or in the Wikimedia Commons. Refer to the source code for full copyright information for the associated images.
Online version of the "Yay!, Bee, See" application
Online version reformatted for OLPC display size
An archive of the application (ZIP, ~15 MiB) including all images
An archive of the reformatted OLPC version (ZIP, ~4 MiB) including all images
Blog post about the application
More recently, Samuel Klein and bsittler packaged it as a .xol library bundle: Yay-Bee-See-7.xol
After Installation
An initial click is needed to move input focus to the input area in the upper-right-hand part of the page.
Press View | Zoom out (the "-" magnification icon) three times (to reach a 1:1 JPEG:screen pixel ratio) and then View | Fullscreen for the best experience.
bsittler recommends SIL's recently released free Andika Basic font for the small type.
And either that, or Magenta's free MgOpen Cosmetica font for the large type.
Background
bsittler's daughter has been enjoying her XO-1 from 2007's G1G1 program much more than expected (originally he intended to wait until she was older and literate to introduce her to the XO-1, but she seemed to treat it as a favorite toy starting around the age of 18 months.) She likes the Record activity (she calls it "Waving hand" and uses it like a mirror-image mirror,) Skype (not bundled, but she uses it to talk to and see far-away family,) and listening to music. She also likes pressing buttons, rotating the "ears" and screen, and opening and closing the laptop. However, she seems somewhat frustrated by not being able to do things on it for herself (or as she puts it, "do it self!",) so he thought he might write a small program where her keypresses give some feedback, and help reinforce her interest in the digits and letters of the alphabet (she loves being read to and recognizes many letters and digits, but does not seem to understand reading yet.)
And finally, many of the letter-image associations were inspired by Dr. Seuss's ABC.