1. I would like your confirmation/comments about Wii being the best option for a 6yr kid.
Actually, I think a PS2 or Gamecube would be the best option for a 6-year old- but for the next gen systems, the Wii offers more content suited to that age range.
2. The Wii can be connected to the TV via component, composite or S-video. Is there any clear adventage of component over the other two?
Yes, a component connection will allow the Wii to display at 480p resolution, if your TV supports it. All HDTV's and EDTV's support 480p. If your TV does not support 480p, you may notice a slight improvement in PQ with component over S-Video. It would likely be unnoticable to your child, but I say use the best option available.
3. Would it be much better to use the Wii with a 26-32" LCD tv, compared with a "normal" 27 tv? Is there a big difference?
Well, 480p (though the LCD would be upscaling it to it's native res) would look better than 480i via your "normal" set... whether or not there is a "big" difference, is debatable.
4. I believe the Wii includes one Remote and one Nunchuk - please confirm if this is so.
Do I need to buy one extra Remote and one extra Nunchuck for multi player games? Or this will be a waste of money? Appreciate your comments.
It does come with one nunchuk and one Wiimote. I recommend buying another, as many Wii games are party-type multiplayer games.
5. Should I buy extra battery and/or battery charger for the remote? Which ones to buy?
I find the battery life in a Wiimote to be pretty good. I use plain 'ol Duracell rechargeables. I don't play the Wii constantly, though, so my mileage varies. When I first got it and was playing it a lot, the duracells lasted me about two weeks.
6. Any other accesory that I should buy?
I recommend the classic controller, an old gamecube controller, a gamecube memory card, and maybe an SD card.
7. Last: which are the better games for young kids (6-7 yrs) ?
I'll be honest here, I'm not sure as I wouldn't buy any games for a child in that range... Legend of Zelda Twilight princess might be okay for a 6 year old... The Spryo the Dragon games on gamecube are a suggestion (my wife loves those), and there's always the older games available via the Virtual Console.