Is Poetry a lost art? I don't think so. Although we don't see a huge popularity for traditional poetry at the moment, I think poetry has gone underground and is best represented right now in hip hop, and popular song lyrics.
I think Children have a natural affinity for poetry. Their brains' language receptors are still fluid and not as locked down as us adults. The music of poetry really works for kids. Poems are a great way to teach kids reading skills, and to foster their artistic natures.
Here are some web sites and references I found for "Poetry for Kids," and "Kids Poems"
Great Book of Poems for Kids
A Wonderful Classic - Shel Silverstein
The Poet's Corner - Poems for the whole family - bonus includes readings of the poems by John Lithgow and other celebs.