i was in the same boat when my daughter got her iphone. does she have her own computer? the only reason to keep her on the same account is if you have a ton of apps that you want her to have without paying for them again. i recommend just cutting her loose with all her own stuff, after all you'll have to do it someday.
I agree that a separate iTunes store account is a good idea. But if you want to control what she puts on the phone set a restriction on the App Store. That's not a recommendation, BTW, just an option; I don't tell anyone how to parent
Also think about how to manage the account. Your credit card, or only Apple gift cards? Or a prepaid credit card or debit card?