Launch the Android Market app, hit the Menu Key and select "Settings."
Tap the drop-down arrow to display the content rating list.
Select the highest maturity level you want to allow the Android Market to download, then hit the "OK" button. Here are the definitions of each level.
Tap the padlock icon to set a 4-digit PIN.
Enter a 4-digit numeric PIN and hit the "OK" button.
The Android Market will now only allow the download of apps rated up to the level you've set. Restricting apps from the Android Market is a good first step to protecting your children from inappropriate apps. However, apps can still be installed outside of the Android Market, so it's probably a good idea to remain vigilant over what your children are doing on their phones.