Rockets made from paper and powered by compressed air are one of my favorite projects to lead with kids.
A quick google search will point you to several launcher designs and I've included the design I most like below. Click on the link below to download the PDF.
Although the above plans do work, I've made some improvements to the pressurization valve and the air release system.
Click on the photo below to view larger version of the pressurization valve (different than what is shown in the plans above).
I've replaced the 3/4 inch "ball valve" (item # 13 in the plans) with a battery operated sprinkler valve I purchased through amazon. You can find this valve at amazon by searching for:
Orbit 57100 3/4-Inch Female Pipe Threaded Auto Inline Sprinkler Valve
The above valve easily replaces the 3/4 ball valve described in the plans. The sprinkler valve works well with a simple 9 volt battery. I purchased the black plastic box that holds the battery at Radio Shack. The "launch activator" was made from PVC pipe I had laying around and the red button that completes the circuit (battery, sprinkler valve, launch activator) was purchased at Radio Shack. The battery box hinge is a piece of black duct tape. I keep the lid closed with velcro. The box is attached to the PVC pipe with a hose clamp.
The sprinkler valve is superior to the ball valve because it releases air quicker allowing you to launch rockets higher with lower air pressure. A well made paper rocket will launch hundreds of feet in the air with only 45 pounds of pressure when using the sprinkler valve. To get that same kind of elevation with the ball valve you would need a much higher pressure (90 psi).
Below I've attached a one page PDF "template" that, if printed on a sheet of 8.5 x 11 paper or card stock, allows you to make a rocket. See the video below at the bottom of this post to learn how to make a rocket from the PDF template.
Watch the video below to learn how to make a rocket using the template found above.