I've read and seen many natural births on film and having the children around... Not sure about hospitals. It seems to bring the family closer together. But if it's hospital, you'd have to check with them to see if children are even allowed, then like the previous poster, keep them in the upper half of the room with you.
The natural births... They were still at least half naked too.... But would definitely be up to you, your comfort level, etc.
I just read one woman had her 10 year old help (wrap the baby in a blanket) because her labor came on so quick everything was done in about 15 minutes. No time for the hubby or midwife to get there. If only haha...
I was in the room for the birth of my little sister. I was 4 at the time and I remember it well. Although I didn't fully grasp what was going on as a grownup would it didn't scare me at all and I wouldn't say it traumatised me in any way.
My second baby is due in 3 weeks and my 20 month old daughter will be present/in the house during the home birth. It is up to her if she wants to be there for the final stages or if she is too scared. My mum will be here to fully support and look after her though. I definately wouldn't force a child to be in the room but if they are interested, why not? There are many great books out there to help prepare children for the event.
My two year old was in the room when I delivered my son. She is not scarred lol and now that's she 7, when I ask her, she doesn't even remember being in there :) As long as they stay by Mommy's head, out of sight range of Mommy's flower, I don't see a problem. I was present as a child when my aunt gave birth to each of my cousins, I wasn't scarred or petrified from the experience. I loved being able to be one of the first to hold them. If its allowed at your hospital, go for it!
Where I live anyone under 18 can't be in the room due to concerns like that. But if you stay somewhere where they allow you to have your younger kids in the room with you I'd just really would think hard on it.
I don't have experience with kids being in the room but my biggest concern would be their muturity level. Could they handle something like this? The room I delivered in at the hospital was a decent size where both my parents plus my husband and the doctor and nurse or 2 was all in the room comfortably. But the room had a couch that was completely out the way of the staff and my husband by my side! More than likely if the room is of decent size like that they shouldn't be able to see too too much but I'm not sure bc my parents never told me that part lol but my other concern is what of something happens and they had to rush you off to do an emergency section, God forbid, but it almost happened to me. Could the kids handle that and not be too traumatized by it. But that is somethings I would think about if it was me. Good luck with whatever decision you decide on.