Yes, that's a fun game! I have kids in the same age range and they also like this game. But may I also suggest: the Little Big Planet games (huge favorite of them also), or the Lego games and, of course, Minecraft (but you might want to wait with this, because there literally is no end to this 'game' and they will play it every second of every day if you give them the chance).
I have no experience with LBP Karting, just the other LBP games: so I would suggest those! Minecraft is of course more a sandbox than a (start to finish) game. It is never ending, so you might want to be careful with that ;)