Believe it or not, a LOT of people ask me that question. I started talking about sex from the time they were very young, with phrases like, "It's bedtime now and mommy and daddy want to snuggle, so be a good girl and go right to sleep." Keep it at their age level.
I also, from the time they were very little, I said, "When you grow up and find someone to love" or "When you grow up and get a boyfriend or girlfriend" - as opposed to "when you grow up and get married" or something else gender specific. It came in very handy, even though my hub was against it, because at age 16 my daughter had no difficulty coming out to me that she was gay; she was bashful about coming out to my hub though. But we have, as she knew we would, completely accepted it - and her - and she has the sweetest girlfriend a mother could ever want. :)
Now that my kids are older (21 and twins 16) they have no problems asking me any manner of (yes, weird, but necessary) questions about relationships and sexual relations. Some people (read "parents") get wigged by the kind of questions I get, but I consider myself blessed that I'm the one my kids (and their friends) feel comfortable talking to about this stuff.