I agree 5 seems to be a good age to start introducing the concept. They typically have a genuine interest in money at this age, and start to understand a basic concept of how to save, and the value of a dollar. Being in school helps the comprehension of how an allowance works as well. Before they know a penny is significantly less then a dollar an allowance really isn't important to them.
My now 8 year old stepdaughters loves doing chores around the house for money. Vacumm a room, she gets a quater.. vacumm all the rooms she gets two dollars... cleaning windows a dollar... she just comes to me to see what she can do.