The Golden Compass is a real kid's adventure. Lots of fascinating characters pepper the story like witches, daemons, talking bears, and cliff-ghasts. The best part for kids is that Lyra, the heroine, is not just carried along by the adults in the story, she's the driving force in most of the action. Be aware that this book is not conclusive. It ends in a cliff hanger of sorts, and there's a sequel that's required reading.
The Golden Compass is supposed to be a kid's story. I enjoyed reading it but I don't know any kids the age of Lyra who could read it and really understand what's going on. I didn't see the movie made from this book, but if the producers were true to the book I would expect the movie to be just as confusing.
My recommendation is read the book along with your kids and make sure you understand what's going on so you can answer questions as they go. Given that caveat, highly recommended.