CraigL and nhgnikole I think you are both right. There really is no right and wrong answer, just personal preferences. Actually when I asked my own brother what he thought he said he wouldn`t want to do business with someone where he heard children in the background. Sounds cold, but for some people it is the truth. Some people will care and some people will care less.
But I think it good to talk about such things, because it sounds like from the responses here that more than a few have had to just deal with it the best way they knew how. So at the bare minimum, it helps to know I am not the only trying to tackle such an issue as I get my business off the ground.
I`ve been a work-at-home mom on and off for the past 17 years - my kids are now 17 and 14. I`ve seen the whole WAH thing relax from where it was when I first started. Back then, you didn`t tell people you worked from home, for fear they might not take you seriously. Now, I think it is so accepted it is not a big deal. My clients all know I work from home and many of my local clients have met my family. They ask how they are doing on a regular basis, and the fact that I have a family and work from home is just part of who I am.
I will say that it is somewhat easier now that my kids are older, but they still yell at me from the other end of the house when I`m on the phone, or barge in my office talking. 
Once my kids were old enough to understand, we created "rules." We explained to them that in order for mommy to be home with them she needed to do her work and that these rules were part of that arrangement. For the most part they were good about not interupting me, or at least not verbally. MANY times I have had a note shoved under my nose while on the phone! But there were also the times they barged into my office when I was on the phone and I had to turn and put my hand out like a stop sign, to signal that I was on the phone and to wait until I was done. I`ve learned to not get too uptight about it all and just handle it the best I can.
Now, I would have to say I have more trouble with my dogs barking than my kids interrupting! I was recording a podcast interview with a very well known Internet marketer a couple of weeks ago and my dogs decided to start barking. We both joked about the dogs never being quiet when you need them to and it actually added some personality to the interview.
These days with cell phones and mobile Internet connections even my friends who work out of the home are always "on." So I think it is understood that life will interrupt sometimes. I think the bottom-line is if you do a great job for your clients and don`t constantly put them on hold for your kids, they will understand. And I`ll bet the kids and dogs and other interruptions probably bother us more than the person on the other end of the phone.
Debbie
Good suggestion about the dog BusyAllie!
Actually, I was teaching and recording a teleclass last week and because I expected my kids to arrive home from school during the call (they`re in high school now so they drive themselves to school), I called my daughter on her cell phone and told her to come in quickly and quietly when they got home from school AND I put the dogs in the back yard. It worked like a charm.
Like you said, I think being a work at home mom, just requires a bit more advance planning! 