We struggled with the same dilemna last year. I was going to give my son (9 at the time) a train set and I tried to cobble together my old SOO line switcher, some tubular track, and a working transformer. All of these items were circa 1977 and had been in storage for at least 25 years. I even bought extra track! I thought I could spend about $40 and have a decent set.
OR I could cobble together my old Santa Fe HO set with new track (similar to fastrack), a few old buildings, and a tyco transformer....again circa 1979 except the track was new.
I put them both on a 4 x 8 piece of plywood, painted it, and ran them a few times about four days before Christmas. The HO didn't work very well, so I thought I would stick with the Lionel set and make it work. But the old track and transformer were feisty and worked, but not consistently.
Then I looked online and saw a brand new Lionel Santa Fe Flyer starter set. It had smoke, a whistle, lights, matching cars, fastrack, and a new transformer for about $150. I ended up buying it the next day--had to pay a premium for expedited shipping--but compared to the stuff I had, it was awesome. Picked up some fastrack at the local antiques mall, bought some buildings at Lowes and Walmart clearance sales, a snow blanket, and put it all together.
I loved it.
He loved it.
The whole family loved it.
His grandpa loved it so much he built his own layout at his house this year!
The reality is that no matter which train I gave him, he would have loved it. But getting him a starter set that was brand new, no issues, a few nice features, has been worth way beyond the price we paid. He spent hours and hours playing with it and still does.
Once we moved it downstairs he wanted to see my old SOO line switcher, and we set it up with the tubular track and it was a nice complement to the new set. We built a bigger layout and ran both trains at the same time. We have been working ever since on expanding the layout.
This year we went to the Toy Train Museum in York and he participated in the "Night at the Museum" program and built a layout with other kids. We've been to train shows, ridden on the Western Maryland Steam train in Cumberland and built our first holiday layout. I think the use of the word "fanatic" is a good way to describe his passion for the hobby.