very small speakers suitable for wll mounting

The Gallo micros or A'diva might be worth checking out. Kids would probably like their looks. They have a new version out which was just positively reviewed on 6moons.

I would recommend Aperion Audio 422's. They can be wall mounted (with Omnimount system), are a sealed enclosure, and only $200/pair! Great for general background music, especially in the playroom. With your budget you can definitely get better, but just thought I'd throw it out there...

How about some speakers designed to be wall mounted.

B&W M-1's - $400/pr

http://www.bwspeakers.com/index.cfm/fuseaction/products.models/label/Model%20M%2D1

B&W LM1's - $350/pr

http://www.bwspeakers.com/index.cfm/fuseaction/products.models/label/Model%20LM1

Tannoy arena's - $900/pr

http://www.tannoy.com/ArenaSatellite

Mission elegante E80 satelites - $1000/pr

http://www.mission-usa.com/index1.htm
look under the specs for the E80 systems to see the E80 sats.

All these need to be paired with a sub to get full range sound.

I personally own both the B&W LM1's and M-1's. The m-1's have a bit more treble detail than the LM1's. And, the LM1's have bit more midrange. I use the M-1's in my office system, pair with a sealed DIY 8" sub and monarchy audio se-100 monoblocks, were I do about 90 percent of my listening.

A friend of mine tried Aperions (522's I think) based on research I did for her - seeking very small, cheap, yet attractive and listenable speakers, and is very happy with them. I haven't heard them yet.

Michael Fremer (with all obvious caveats about the HiFi press) wrote, "Whether because of the DiAural crossover or some other aspect of design, the system's biggest plus was its ability to produce a remarkably large, coherent sonic picture. Even in 2-channel mode, this small system's soundstaging abilities were remarkable. When I closed my eyes, I would never have guessed that I was listening to such small boxes....The high-quality Vifa drivers easily handled high power without strain, and the system could play surprisingly loud, filling my large listening room with finely focused music or movie sound. Friends were routinely astonished by the sheer amount of brute force these speakers produced..."

One thing that's great - which sold my friend on them - is that Aperion offers a 100% Money Back (including shipping in BOTH directions) guarantee if you don't like them for any reason.

Besides sounding great, the colorful finishes will be nice in a Kids' room. Since they're milled steel, they're almsot kid-proof to boot.