My first thought was a pillow case. Maybe you could shop with her for the fabric & then you could cut the pieces out for her to sew together. I like Lena's idea of sewing on paper first to get the feel of the sewing machine & practice on sewing straight lines. A 1/4" pressure foot will come in handy for her to get the seams the right size (or a piece of painter's tape taped down on the machine bed).
I always dreamed of having a granddaughter that I could teach to sew along beside me. As it turned out I only have grand-fur babies!
