I agree with JazzTele.
In my experience, if the student is over 4 feet tall, start them on a regular size guitar. Not a regular-sized dreadnought or Gibson Jumbo, just a regular classical or a folk sized guitar, or possibly a Squier Tele. A&L makes a very nice nylon string version of their AMI that is great for younger students...
AMI Nylon Cedar.
Nylon strings are easier on soft fingers and don't rust, so they tend to last longer, but extra light electric strings are fine too. If you go the electric route, get a hardtail like a Tele, no whammy bars to start, especially for a 6 year old.
I generally I don't teach students under age 8, but once I taught a 3 year old for about a year. I only agreed to teach this kid because her Dad, Grampa, and all 11 big brothers and sisters had perfect pitch, so she was in a good environment. When your 7 year old brother is screaming, "
That's B flat stoopid!" from the other room, you learn to stay in tune pretty quickly...
In my experience/opinion, physical size isn't as big an issue as attention span, and the way kids process information.
As a teacher, I've found that many parents are just looking for a musical babysitter, and I'm not interested in doing that... For students under the age of 10, I require that a parent or guardian be present for the entire lesson. They can't just drop 'em off and come back in a half-hour (which often is more like 45 minutes or an hour...)
Also, I require that parents of very small children at least learn how to tune the guitar themselves. If the parents won't take the trouble to learn how to tune a guitar, their 6 year old isn't going to think it's worth learning either...
If your nephew's parents won't learn how to tune the guitar, you might consider a keyboard like the
Casio LK 100 for starters, and save the guitar for the future...
FWIW, I've had good luck with the
FJH Young Guitar Series. The workbooks and accompanying CD are highly recommend. The CD has some clever arrangements where the kid can just play 2 or 3 notes, but sound like a rock star playing in time with the CD.
EDIT:
FJH Sample1, and
FJH Sample 2.
Hope this helps.