I know a lot of people feel that small dogs shouldn't be around babies because of their size. It's a personal belief though. As you said, as a responsible parent you should be able to teach your kids the correct way to act, behave and handle a small dog. Unfortunately, I think there are more irresponsible parents out there these days, which is probably one of the main reasons why breeders have that rule of thumb. And rightly so.
Zeus did not like children when I first got him. He tolerates them, lets them pet him when we go out under my watchful eye but he has snipped at them before. It's mostly the running up to him part that freaks him out. My folks run a daycare out of their home and often Zeus has been dropped off during the day if I had meetings or something and Chad wasn't going to be home. He has definitely come around to them and will just walk away if he doesn't like the situation he's in.