Steam? Sure, it's fine. They're just a distribution site for the major game houses. I've gotten a few games through them, there's really no way you can be cheated, same as iTunes or any other distribution site. It's generally cheaper than buying the full game in a box, since there's no physical media involved. The drawback is the games require an internet connection, at least to register the game and set you up for playing (single player games, for the most part, can be played offline, multiplayer requires an internet connection.) And there's the bit of nasty where you can't back the game up, so if you have to reformat, you'll be right back where you were downloading for days to reinstall.
The only drawback is the servers are generally overloaded, so you can't plan on sitting down to play Guild Wars, getting in right away, and playing your brains out. It took me two days to download Portal, and about the same for Half Life 2, simply because I kept getting kicked off due to server lag. You can read some dedicated game forums about that problem. Been there since the beginning, and they've never fixed it. If he's interested in MMORPG's like Guild Wars, Star Wars Galaxies, games of that nature, you can usually buy them direct from the publisher at the same price, without the server hassles.
The plus it has is older games that are impossible to find in stores are generally there, if they've used Steam in the past. They've got a good FAQ on the site (it's steampowered.com, steampower.com is a steam engine site