You can do it in most any photo editor, but the specific steps may vary a bit. In general, you need to "select" the object(s) you want to isolate. In Photoshop Elements, I usually use the magnetic lasso to do this. I usually copy that object into a new layer and then convert the background layer to b&w. When I'm finished, I flatten the layers and save it as a jpg file if I want to print it. Oh, and I start with a copy so that I still have the original image.
I think that some people convert the image to b&w, then use an eraser tool to "erase" the b&w. So in your case, you would use the eraser on your kids.
Hope that makes sense. Someone else can probably explain it more clearly. I'd never make it writing instruction manuals.