We've been taking our girls to Firstcut4kids in Newport Beach ever since a disastrous cut from a regular salon.
After paying $10 for the disastrous haircut, and then waiting 4 months for it to grow out, $25 for a good hair cut no longer sounds that bad. We don't have to go very often, maybe 3 times a year, so it works for us.
They also braid and put in the little flowers in their hair after the cut.
Never been to Rainbow, was totally scared off by the Yelp reviews. Maybe I'll check it out sometime.
Most awesome place for a kids haircut is the Barbershop in the Magic Kingdom at Disney World. $17 for the haircut and style. Extra $5 and they'll add glitter and hair color. It's just a little far though...