Our dc3 was born at home when dds1 and 2 were 3.10 and 2.3 years old. I started to labour relatively strongly whilst they were having dinner, so we got them into bed fairly swiftly and said good night. All was quiet upstairs.
An hour or two later ds1 was born. I suppose we had been making a certain amount of noise, but the birth went very smoothly. A few minutes after the birth dd1 appeared downstairs. She told me that she had heard a baby crying and could she come and see?
I can only suppose that she had heard significantly more than 'a baby crying' as the noise of a 5 minute old baby is not enormous compared with me in labour.
Anyway, we let her stay whilst we got ds1 dry and warm, and she insisted that she didn't want to go to bed until he had his pyjamas on. She stayed with us whilst the placenta was birthed, and saw a certain amount of blood etc, but there was noone else to look after her and it seemed that she was much happier being in the thick of it than being sent back to her bedroom by herself, just so that she wouldn't be shocked by what she saw.
She finally went to bed at about 11pm, but only once she had chosen the clothes for her baby brother, helped to put them on, and done up all the poppers on the pyjamas by herself.
She and I both have wonderful memories of this birth, and I have no regrets at all.
I am now pregnant with dc4 and I have no plans at all to encourage dc1,2 and 3 to watch me giving birth. Labour is enough for me to cope with without having to attend to the needs of 3 small children. But I hope that they will be close by and that they will be able to meet their new brother or sister very soon after the birth. The first hours with a new baby can be so magical, that I wouldn't want them to miss out.