As said above, while it can be hard for some people to pay a few hundred bucks on a kids bike, but they can be sold for significant money later on. Or for cheaper look for somebody selling a nicer bike. A $250 kids bike from companies like Trek or Specialized found at bike shops use real components such as threadless headsets, linear pull brakes, real bottom brackets, real seatposts, and so forth. There are times I say a Walmart bike is all a kid needs, but its usually in the 4-6 year old range.
Ok, so a couple other things here. First a 16" bike for an 8 year old is very likely too small, but of course that depends on height. My 8 year old son is 4'7" tall and rides a 20" Specialized HotRock 6 speed, and he will really need a 24" this summer. Within 15 months he will be rolling on a 700c road bike when he hits 5' tall.
You mention buying a BMX bike when he's a little older. Thats fine if he really wants a BMX, but otherwise BMX bikes are horribly ill suited for anything other than a BMX dirt track. Something like a Trek MT220 or Jamis X.24 (just examples) are better bikes for riding almost anywhere. Better geometry, better comfort, gears, and larger/faster/better rolling wheels. Front suspension though is take it or leave it at this level. Depending on the boy, he will also be shooting up like a weed as well and when kids are growing 4 inches year you can sometimes skip a size depending on the bike.
Just food for thought.
Last edited by teterider; 01-12-11 at 09:37 PM.