(Also check out our Free and Reduced Apps for June 1st!)
Here's another great FREE app for older kids, and adults! Guitar! by Smule is currently a completely free app, with no in-app purchases!
The user plays the entire accompaniment for the vocalists (in a cool tie-in, the vocals are recorded on another app by Smule, Sing! Karaoke.) Swipe and tap by following a color-coded system to play along to 12 different songs, with more to be added in later updates. Earn coins to buy different guitars and unlock the songs--better accuracy earns more coins.
It doesn't teach chords, and I'm pretty sure being good at Guitar! won't translate into being a good acoustic guitar player. But it's addicting musical fun in an incredibly smooth interface, and is highly recommended!