Congrats on your decision and welcome to Mooney Space! This site is one of the most helpful anywhere and has a great community. Hopefully they'll be able to answer any other questions you have, too.
I'm still a relatively new Mooney owner, only had my C for a year. But I looked into it because I enjoy cross countries. I can't speak completely to the kids, as I have none of my own, but it does seem to me that I could fit two young kids in the back of my plane pretty easily. The comment above about kids fitting in a short body (like my C model) up until about 12 seems right. I can also fit myself, a passenger in front, and one adult passenger in pack pretty comfortably, too.
Just like everyone seems to say, find the plane that fits your mission. I wanted a good cross country plane, and I couldn't be happier with my C. It's great for that. I've flown mine from Washington state to Georgia (yep, I moved) and all over the place in between in just one year. It's an absolutely great cross country plane. Mine has quite a few upgrades (I would be buying a lot of J parts if I ever had to replace them), but it's great. Mooneys of any size are hard to beat for speed and fuel economy. It has plenty of room for what I need, too. As mentioned, you sit lower, and it has the appearance of being smaller, but once you're in, it's really not much different than most planes as far as space--just the way you sit. I'm not going to load it up like a Bonanza, but the times I need that are very few and far between.
I will say, though, that buying a plane for the first time can be an interesting experience. So, from me, I'd recommend finding the plane that you want early on-if nothing else, just so you only go through all that once.
Wish I was closer, I'd let you come try it out and take a look for yourself.
If you have any other questions, feel free to private message me.
Good luck!