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I have a wheel for my PS2 and I like the feel better than the controller, as I found the analog sticks to be too jerky, but I am racing cars and karts all the time, so I have that feel "built in." Your son may like a wheel, or he might not.
I don't know much about the Xbox steering wheel, and I am not sure if there are any aftermarket wheels to choose from. Do some research to find a fairly cheap wheel that's well built.
When he gets older and becomes a harcore racer and wants the ultimate feel, I'd go with any wheel made by Logitech (Not sure if they make a wheel for the 360), as it is about as good as it gets, but their wheels are fairly expensive.
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