Tough choice... I personally would probably keep both the M1A's... and later down the road if you want an AR I'd suggest picking one up in 6.8 SPC. That's just my bias though, not a big fan of the .223
I have a question for you, though. How old are your kids now? I would think of getting a Ruger 10/22 if your kids are still real young, but if a little older, then an AR might be a good choice.
Here's another option you might want to consider. If your kids are old enough to handle centerfire weapons, you might consider the M1A SOCOM. Still shoots .308, but has no recoil at all. Okay, maybe just a little, but VERY little recoil. But no doubt that the AR is more versatile, in that you can choose all types of barrels and stocks and grips and all the other. The M1A platform does not have as many choices for customizing.
Or, you might want to think about a Mini 14. Looks kinda like a M1A but is in .223 cal. I also hear that the new version of the Mini is much more accurate than the older models.