Maniacbug, this has been my experience in Club with small children (alas not recently because we're too poor), but people are politeness itself, and I have to say that given the increased space between seats and good in flight entertainment, free toys and so on, kids and their parents cope a lot better and consequently do not kick off as much. If you treat them and their parents like savages then it seems to be they will respond by bahving that way as well.
I do think a lot of families would pay a bit extra for enhanced customer service both at the airport and during the flight. Things I would value include:
Dedicated lounge and security area (a bit like the one for unaccompanied minors at Heathrow). I would pay probably £50 to use this for the whole family, if it included light snacks and nappy changing materials, and if there was seriously reduced security queuing.
Simple kids' drinks in a cup with a lid and a straw and kids' sandwiches and fruit snacks on the flight. I would happily pay a fiver a child for this, probably (unit cost to airline £1-£2)
Nappy changing packs with a disposable mat, size 4 nappy, 5 wipes and a scented bag. I would pay a pound or so for something like this. (Unit cost to airline 50p or less)
Kids' entertainment pack like you get in restaurants - I would pay £2 or so for one of these, more if the toys or colouring books were really good quality. (Unit cost to airline 50p or less)
So that's £70+ the airlines are not getting out of me, because they think I want to queue like a refugee for two hours and subsequently want microwaved bacon rolls, perfume, Yves St Laurent lip gloss and playing cards with pictures of planes on.
At the moment I just drive everywhere, having given up flying, because I refuse to be nudie body scanned just because a group of male physicists thought it would be a wheeze to invent a new expensive toy to sell to airports, and then persuaded the Government that this would save the world from terrorism (which it will have practically no effect on).