Yes, you should tip on behalf of your children even if they do not set foot in the formal dining rooms. Why? Because they are going to eat SOMEWHERE during their time onboard. Even if they eat at the buffet for every meal, someone will serve their food and clear away their dishes. When you tip your assigned waiters at the end of the curise, you're tipping for the service you've received at every breakfast and every lunch (exception: Palo). If you don't tip for your children, you're "stiffing" the people who served them these meals.
However, in all honesty, you don't receive the same amount of service at the buffet that you receive in the rotation dining rooms. Therefore, I would tip only the minimum amount on behalf of your children.