I have ponder this same question. Since last May, I have been planning a 2002 cruise to Alaska and have read different opinions on both sides of the question. I have two children also, but will be ten and nine next June when we cruise. I opted for an outside balcony. Why?
First, and foremost, viewing. My wife hates to be cold, so I told her we would get an outside cabin so she could view the beautiful scenery and still have somewhere to be warm. Second, we wanted a little extra room. Third, we booked a room off the aft (rear) of the ship. We have the advantage of "seeing" both sides of the ship at the same time. Someone once wrote that the view from the "rear" of the ship as the wake spreads before you is awesome. After reveiwing several photo galleries that show this, I couldn't see saving the money to pass up a chance to have memories that would be cherished for a lifetime. The rooms on the aft, usually, have a bigger balcony. Also, when going for a aft balcony, you loose the wind problem mentioned in previous posts. Another person also mentioned that having a morning coffee or an evening dinner in your cabin while sitting out on the balcony watching the scenery go by was...as MasterCard might say is, priceless.
I, too, am very conservative and frugal (cheap). I don't make six figures, I had to work an extra job to pay for the trip,but I think this is one time when you have to step up to the plate and pay for a luxury that will enhance the trip. Karen has given some great advise on where else to save money in Alaska, ie., booking your own tours, doing your own pre-cruise tour, etc. In these areas, I will save my dollars, but on the ship, I have to try a balcony. Maybe next trip, inside cabin.
Also, I was very persistant with my travel agent for a aft facing balcony. After much research, Princess, HAL, and Carnival doesn't offer a "quad" aft balcony room. RCCL offers one, on the Legend of the Seas. Be sure to check if the cruiseline requires that the lower beds be seperated to allow a "fire escape" for the kids sleeping in the upper bunks. This will be our 15th anniversary present and that was not to appealing.
The bottom line, to me, was in 10, 20 or 30 years, and I look back on this trip, am I going to say, "wish I would of had a balcony?" Going to Alaska is not cheap, period. I am not sure if I will be able to afford to go back to Alaska, at least until the kids are out of the house. Where do you cut corners and where do you just say, "Go for it!"? That is your choice to make. This is why the cruiselines offer inside and outside rooms. To each his own.
My final decision was base on this...when I die, can I honestly say on my deathbed that I live life to it's fullest and with no regrets. I had a friend of mine that was on the first plane that crashed into the World Trade Towers. He was the one that taught me to live life to the fullest and with no regrets. Needless to say, I'm in a balcony.