This is an interesting way of playing music. A standard resistive touchscreen can be really great input device for such musical instrument. It only requires four wires for input. Well.. ADC inputs. But most microcontrollers have even more of those. What about output? A PWM modulation works like a charm. Rohit Gupta built a touchscreen piano using MSP430G2231 microcontroller.
To read touchscreen coordinates he used TI App Note where you can find pretty all details. Also his previous experiments with generating PWM tones on MSP430 also were used here. To make it easier play, he drew a grid on paper and put back of resistive film. All is left to play a good melody. I think kids would love such project.