I had this problem with Faust and all kids that he wasn't comfortable around when he was younger. After counter conditioning and behavior modification, he loves playing fetch with all kids. He even helped my nephew feel more comfortable around dogs, since he is never around any.
http://www.youtube.com/watch?v=Q_x7WgAy7dcHowever when he was younger, he would bark aggressively, growl, lunge and snap at kids.
I strongly recommend seeing behaviorist, but I'll let you know what worked for us. First thing that we got was a basket muzzle for everyone's safety. Not the wrap around kind that hold their mouth closed, but a plastic one that allowed him to totally open and shut his mouth that we could feet treats through the end.
Then we kept him on leash and had kids over. I'd bring him out in 5 minute increments around the kids, with his muzzle on. While he was out, I stuffed treats through the end as fast as he could eat them. Seriously yummy treats, like roast beef, cheeze, ham... etc. Then I'd put him away in his crate with the door shut and a double gate across blocking the kids from the door. We did this for a couple weeks.
Then I was able to cut down the amount of treats and have him out(still with his muzzle on) for longer periods of time on a down stay at my feet. When he started being able to fall asleep at my feet, meaning he was comfortable around kids, then I started bringing him out without a muzzle and upped the treats again.
We then started bring him outside on leash with the kids and went through the same routine while they were running around, screaming, ie... being kids. When he was calm, I started playing fetch with him while having the kids next to me, then eventually had them throwing his ball, frisbee or stick. He now loves kids.
Good luck, hopefully you'll be able to find something that works well for you guys.