My Yorkie LOVES kids! she is very tolerant of them. I have 2 nieces aged 5 and 2 and when I got her they would BEG me to bring her over so she spent lots of time being carried around by them! She tires of them very quickly now but will just find me and stick by my feet. They feed her and run around with her which she loves and I have never had a problem. Our neighbours 2 year old often comes to my door to see her and she just gets super excited and wants to play!
Each dog is different though and I suppose though that they are very small little dogs and a boisterous child could scare them. as with everything, small doses are key. you dont want to bombard your dog and force them to like kids. perhaps a child hurt or scared him that you arent even aware of and he remembers that? You never know...
Be patient with him and introduce kids slowly and calmly. Perhaps he will just never like kids and that's just his personality. the kids must also know that he needs to be respected and treated gently and not rushed upon as kids often do!
Perhaps it may also be jealousy? Mine isn't aggressive at all but as soon as my fiance tried to give me attention she is on top of his head trying to distract him and get his attention back to her.
the biting concerns me tho - definitely sounds like a defense mechanism. he's afraid and probably gets so uptight he turns on you not realising he is doing it. Does he cower and hide after he bit you like he feels he is in trouble? or does his hysteria just carry on like he didnt notice he bit you at all? Perhaps when you are expecting kids to arrive put him on his leash and train and reward him for even the slightest calm behaviour
training and reward can do wonders!
How does he act when the kids are just around and not paying him attention? does he still bark and get upset?