One of the best portrait lenses for the Nikon D90 is the Nikkor 50mm f/1.8 lens which can be found here: http://www.amazon.com/Nikon-50mm-Nikkor-Digital-Cameras/dp/B00005LEN4/ref=sr_1_1?ie=UTF8&qid=1298955171&sr=8-1. At low f-stops the lens blurs the background beautifully and will really make the pictures of the kids pop. An added plus is that it can take great photographs in low-light situations. It only costs $125 as well.
IS is not necessary but USM is. THe 70-300 is the best choice for your needs as long as lighting is good.
hope this information will be help full for you
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