Podcasts could be useful in the classroom to engage students in other forms of teaching (rather than teacher talk, students listen). If using for younger students you should use short podcasts so students don't become bored, older students may stay engaged to longer podcasts if the information is interesting and linked to subject areas.
I found several podcasts that i would use in the younger grades of school. These podcasts are called 'Stories to Read, Words to Know' by Evan-Moor Educational Publishers. These podcasts are based on storybooks. The book gets read by a lady at a pace so children can follow as she reads, then it is followed by echo reading (she reads, then students read). I believe these particular podcasts would be appropriate for Prep/Year 1. Students could also access these podcasts from home and get additional support from their parents to improve their reading.
"Today's kids are challenging us, their educators, to engage them at their level" (Prensky, 2005). The kids of the future are technology literate, so as teachers we need to engage them in the new technologies rather than enrage them with the old pen and paper method of teaching and learning.