You've picked a large topic, and not an easy one either. I think everyone has the right idea. I would just like to add that each child needs that little bit of individual favour now and then, a pat on the back, some help with ukemi, or just plain old advice from Sensei. If you teach them NOT WHAT to do, then they will find it easier to learn WHAT TO do.
Our kids class is large, ages from 5 - 13yrs, but we seem to manage ok. Those that don't want to learn need a different approach, ignore them, and they will come around, or drop out all together.
They all have differing levels of confidence and ability, you can't teach confidence, but you can let them experince it through different processes.
Parents that drop their kids off for babysitting don't last long, the child will usually know they are being dropped in for this, so will act up. Discipline has to be a rule from the beginning. Kids have to know the boundaries for training, but it doesn't hurt to have a bit of fun with them either.
We used to have parents storm onto the mat when they "thought" their child was acting up!! Kids loved seeing parents getting told off, but they broke a rule and stepped over the boundary, we earned a little respect from the kids with incidences like that, but you have to be careful not to undermine their parents or things can get haywire!
Kids are just that, let em be kids and just try to teach them Aikido, a few games like dodge ball and slalome(sp?) ukemi between cones breaks it up on odd occasions.
In fact a game of dodge ball at the end of class goes extremely well, and only takes a couple of minutes.
Patience and teach at their level, view everything from their perspective, generally what works with kids works with adults.
A nice idea is to teach them Jo kata. Kids must show a certain level of responsibility with their training before they are allowed to learn Jo, and even greater responsibility once they are allowed a "weapon". It's a bit of a carrot, but they all respond well. Our youngest learning Jo is 5, and he can count up to 14 all on his own!!
Give more attention to those that are interested, they are not worth loosing. The ones that act up, the more they listen they more attention they recieve, if they do not respond, have them sit out for the entire class and continue this until their attitude changes. It either works, or they leave, sometimes the latter is better for everyone. Although a couple of our troublesome kids have been worth the extra effort, and have made a tremendous turn around.
well....all in all, teach kids what they came to learn, Aikido( or whatever MA it is). Throw a few games in now and then for confidence etc, but above all else, have patience and have fun.
good luck Liane