Fiberglass insulation will absorb some sound but it will not help much with foot noise from above but carpet will. So will resilient channels supporting the ceiling drywall.

It will only absorb some sound.

Personally I would never pay extra to sound insulate for kid noise.

FG batts between the joists are a waste of money unless they're coupled with resilient channels for the drywall. Plus the FG does absolutely nothing to reduce impact sound.

Here is a link that might be useful: City of Vancouver, B.C. Noise Control Manual

We had the same option - our Master bedroom is also downstairs, but with nothing above it. However, the master bath is just below our kitchen, so some noise from walking around will be heard in our bedroom. We looked at insulation options and found what others here are telling you - adding any batt insulation would not help much. We were told that mineral wool would be the best for sound deadening but it wouldn't do a ton. Flooring choice upstairs will make a huge difference - we have laminate with a foam under-layment upstairs and foot traffic in shoes is very noticeable. In socks it is hardly heard.

We did double rock, with sound insulating caulk between the sheets, in the ceiling of our sons room. His room is directly below the great room and our TV/Stereo area. We felt it would reduce noise transfer for him when he was sleeping. The added bonus is when he gets older it will help the expected noise that will come from his room from being heard as much in our upstairs. That is the hope anyway.

We can tell the difference in his room with the extra sheetrock on the ceiling. Thinking back we might have done it in our Master and the hallways leading to our Master. The nice thing is we can still do it at a later time if need arises.

Thanks for all the input so far. I have decided not to do the batts as it sounds like it is a waste of money. Second floor will be mostly carpet except in play room and we can put down some better underlayment. I do have one more question though. My first son's room is directly over the laundry room where my wife also sews at all hours! Would having just that area foamed with open cell be of any help?