My students are always impressed to learn that Audacity is a free tool. They love remixing music and testing out the different effects. I usually do two lessons with Audacity.
The first lesson is a lot of fun, and it introduces the students to the functionality of the program. I tell them that they are working for the FBI and are investigating the crash landing of an alien space craft. Part of the investigation involves interviewing an alien named Nugget to find out more about his home planet. I give them a some of Nugget's words like oh-ell-ah and yall-furr-shtop. They use the microphones to record the words and then use the effects menu to reverse them and translate them into "English."
For our second lesson, we work on podcasting. The students write a short (30 seconds-1 minute) news story to read on the air. If this lesson falls around the holidays, we report on activities in Santa's workshop, weather and traffic reports for Christmas Eve, etc. The students record their podcasts and then edit in music and sound effects. The podcasts are burned to a class CD, but could be published online if that was what the teacher wanted to do.