This bug seems to be caused if a pregnant Sim gets reset during the pregnancy.
Try not to manually reset them while their pregnant. The children issue is why I never really asked for them to be included. The pregnant mod from Morrowind actually addressed the whole possible abuse thing rather well I thought. The babies from the original mod from Morrowind didn't age. You could also do no harm to them as they were treated like another item in your inventory rather than a living thing.I have an idea though, if children were to be included in this game or Skyrim why not make it a special crime to harm a child? Give it an automatic high bounty where the guards will just want you dead.
