Going into 8th grade? I think you should use the money as a learning situation and plan some investments, start with some broad index funds, but also think about investing some into individual companies/stocks. Talk to your son about Companies that he really likes, knows, and/or has an interest in (steer him toward your basic consumer products like Kraft, Ford... etc and avoid tech like Apple (since the tech world moves very fast and you and your son may get flat-footed in the event of market/tech changes). Bring him into an evaluation of each of those companies and select a company to invest a modest amount with. Same with the index funds, talk about why they are considered "good investments".
My grandmother introduced me to the investment world with a gift of 3 PepsiCo stocks many years ago, and its world has ever since fascinated me. It will be good to start learning (or really observing) how stocks work and what drives their value. Over time, he may realize there are many irrational factors that play into the value of an equity investment. Personally, I use Scottrade for most of my personal investing needs (very low trading costs, NO maintenance fees, actual franchise/office locations in most of the country). Also, Yahoo! Finance and Google Finance are great tools for basic-level research on individual stocks.
Also, as a side note, get him a checking account opened. Its never to early to start understanding the fundamentals of money and the tools society uses to facilitate its use.