Like Wordle, I think Word Clouds is such a great way to introduce new vocabulary, highlight sight words, practise spelling words, or have kids focus on new words they will find in a book. And the great thing is, once its saved, you can then manipulate it as an image if you want (See my tutorial on how to add pics to Wordle.) However, it's not as versatile as Wordle as far as changes you can make to colour selection etc.
Take a moment to check out the huge ABCYa site. It's well worth a look around, if you want educational computer games and activities for your kids, and is neatly divided into grade level.
If you'd like more ideas on how to use Wordle with students, here is a great Google doc, ideas for language students, a slideshow including how- to directions, and a different slideshow with many great ideas, or join in and play Guess the Wordle. Most of these ideas will work with Word Clouds too.