Assuming you are using the "standard" Minecraft server available from minecraft.net (I'm also assuming you are using Beta as opposed to Classic)
you would change the values in the server.properties file; specifically, you want online-mode to be "false" and "check-names" to be false, otherwise it will be required for them to login to the minecraft.net server (I'm assuming that you want a LAN server because they haven't purchased minecraft for themselves).
If it's classic, well, I don't know. Personally, I consider classic to be more akin to a 3-d paint program for kindergarten children, but that's just me.