MIDI can be used to teach basic musical values. However, at the Elementary level, pre-packaged software and/or MIDI-based music labs (Yamaha makes the latter) are better-suited. Unless you're excited about writing your own plans and structuring your own experiences . . . buy and install!
Karaoke is great fun! There is an alternative MIDI format aimed at Karaoke, and you can simply download the files and play them on your computer. It's nowhere near as good as real Karaoke CDs and players, and the selection of files is quite slim - but it's free!
Theory tutorial programs do quite well for elementary theory. However, a keyboard, an inexpensive MIDI sequencing program, and a computer provide a very good interactive environment for theory instruction! Click here for an example lesson plan teaching perfect 5ths.
The main advantage to a MIDI-based music theory instructional lesson is that it's truly interactive and discovery-based. The student can play a note or notes, hear them, see them appear on the staff on-screen in the music software. The notes can then be instantly transposed up or down, given rhythm and tempo, played by another "instrument," or cut and pasted into other music. The teacher or student isn't forced into a lock-step tutorial, and the things s/he creates can be saved, re-used, and edited later. The resultant work can be saved as a MIDI file and played on any other computer or posted on the Internet without the risk of bandwidth problems caused by "real" music files.
Of course, like any tools which aren't ready-packaged instructional lessons, you have to invest some "sweat equity" to make them really come alive for kids. It's worth it in the long run!
Teaching kids how to write music is painful. MIDI really comes into its own here, since any composition written by a student can instantly be played in MIDI, so they get instant feedback. Traditionally, such feedback was provided by a piano, but using MIDI tools means you don't have to be able to play a note on any instrument to hear the results of your work!
Much of the popular music world (anything other than what we traditionally call "classical") is built around pattern and repetition - an area for which MIDI is perfectly suited, since it is extremely easy to construct repeating patterns. For an example - download and try out Fruity Loops, a simple but effective MIDI-based rhythm program which students can set up and use in less than a minute!
MIDI was going to be the great Internet music source - back when bandwidth was measured in bytes, and an extremely light-weight music delivery system was needed. Of course, the early soundcards weren't exactly helpful, since MIDI files sounded like Casio toy keyboards - or worse. Increased available bandwidth and compression algorithms (MP3, Real Audio, etc.) has removed the need for MIDI, and it's presence on the Internet has dropped off.
However, if your school has bandwidth concerns (as don't we all), chances are you've already blocked MP3 sites and downloads. MIDI can provide simple music delivery, and, since MIDI files are not sourced directly from commercial music recordings, they have none of the copyright snafus of MP3. Students enjoy finding and including MIDI files with presentations and other media, and downloading them is faster than an ordinary text file.