Don't underestimate their abilities either physical or mental. Kids like adults need to be challenged and it makes them feel special (in the best way) if they perceive themsleves to be part of an elite group.
Our kids class dropped in both enthusiasm and numbers when we adopted a softer approach - went back to hard work sessions - numbers went up of both returners and joiners and the class atmosphere really lifted.
This touches a point we have been discussing in our Dojo. The way I teach Aikido I rely on my students wanting to learn so I think it would be perceived as very soft. It works out fine in the adult class though.
However in the kids class I am aware I should probably adopt a harder style - but I have no idea how to do that. Could you explain just a little what you mean by 'Hard work sessions' - especially how you deal with it if somebody slack off.
I hope you can help.