Thank you VERY much Phil, Jon and Jeremy! All of you have givin me just what I wanted to know! You all have different views of how footbag should be taught which is completly natural. I am open to more views over the next few weeks before the classes and I will read over your posts many more times in deciding exactly what I should do with the half hour we are givin!
I am currently thinking of how I should explain the sport of footbag, and when during the sesion I should do it.
So far my plans are:

Make it brief, a few minutes talking is more than enough.

Explain that in freestyle footbag the aim is to perform consecutive tricks using one's legs and body, delaying the bag between tricks.

Demonstrate the fundemental stalls, toe and inside which leads to clipper.

Speak very breifly on the concepts involved in a trick - dexterity(legs) and body.

I
might mention that the bag's flight between delays is devided into uptime downtime and peaktime and dexteritys and body concepts can be performed at each of these intervals... but maybe not.. don't want to overcomplicate it.

I will explain clearly that kicking, while not seen often in professional freestyle is a fundemental building block to learning the sport, much like tiltless play is.

Finally I will explain the basic kicks - inside, outside and toe so they know what they are doing in the next step...

After the explanation I will get them into small circles, so they get as much bag time as possible each, but can still be social with it and have fun.

I will get them to kick for a short time(explaining the no self serve rule) and during that time me and toby will rotate round the 5 or so circles - this will allow them to get comfortable with the bag, eachother and us.

When they are starting to get pretty confident, I will stop the class and tell them it's time to move on to the next step. I will explain the change in rules, the bag should rotate round the circle clockwise and each person is alowed a couple of turns each and that the goal now is to try land an inside stall (which I will demonstrate using phil's technique). I will also encourage them to help each other stating that we are working together to achieve new moves, not against each other.

The class will go back into circles and me and toby will make our way round for a while to check progress, make sure everyone understands and give advice where needed.

If they all cotton on very quickly to the inside stall I will soon after give instructions to the class for inside stall, and a bit later clipper stall, using phils techniques to demonstrate. Then we repeat the rotate round circles and check progress/give advice bit.

At the end (perhaps 5 mins before finishing) we will stop everyone and give a demonstration of freestyle footbag. We will begin with the stalls we have just shown them, then move onto basic dexing tricks, explaining breifly how it all fits together and then just have turns doing 20ish contact strings.

Finally we will talk about why footbag is such a great sport - as Jon said, injuries are rare, equipment is inexpensive, and within a few hour long sessions one can be competent enough at the basics of the game to teach students in a class how to get started, much like the rest of the sports covered in the New Zealand PE cirriculum.
Whew! What do you think? Anything I should add in there? Anything I should change?
I would also not mind some advice on
what you think should be demonstrated at the end and what impresses people the most about footbag - things the can understand (eg double atw, ducks, spins) or things they don't (eg toe shuffel, dex intensive fast paced stuff).
Thanks guys!