Target is selling the Kyocera Hydro Prepaid Smart Phone for $9.99, in store only.

It's locked to Boost mobile, but you can use it Wi-Fi only. (Talk-a-tone for voice calls, until Hangouts add them for Android.)

It's not a great phone, but it does have ICS, a MicroSD slot, and has access to the Google Play Store. And it's waterproof (in some manner.)

I bought my two cousins one each for Christmas. They're 4 and 6.

I'll install some games on it, block the phone app with a password using something like App Lock https://play.google.com/store/apps/details?id=com.sp.protector.free and they'll have a phone they can play with until they lose it, or break it.

Other uses: An MP3 player. A GPS tracker for running. An IP phone for the house. The cheapest device to test your app on. A $5 phone and a $5 charger and usb cable. A bad camera.

Specs: http://www.phonescoop.com/phones/phone.php?p=3771