All Things Cupcake did a nice roundup of DIY cupcake stands. The photo above is the image we originally had in mind when we set out to find these directions.
We also found this pretty stand over at The Kitchen that's made using terra cotta pots- just thinking the dummies and cake boards are probably more kid-friendly and less likely to get broken. To make the first one, you'll take cake dummies and cake boards, decorate them, and basically stick them on top of each other. You can read the complete how to at Cake Journal. If you're wondering where to get cake dummies and boards (we were!), a quick search online turned them up on numerous baking sites, but we also found them both on Amazon.