I blogged, at least I *think* I blogged about Damien Fate's tiny avatars, Loco Pocos a few weeks ago. I'm indebted to Gwyn Llewellyn's blog for news of the first short animation filmTiny Nation produced in SL using these avatars. It's amazing... and when one considers the normal cost of making a short film by other means, must be amazingly cheap!
I thought the company was Lil Clan... but it is actually ill clan... which seems a weird name. No matter, it's an amusing film, and fills one with the feeling of the immense potential in the platform. Not to mention admiration for the avatars and the smooth running of them in world!
Even if cartoons aren't your thang, I'd recommend you see this... it is SFW but has adult themes and so may not be suitable for, or understandable by, children.