I think the most important bit of advise you can get is that 3 people will have 3 entirely different cruise stories, so take in all the info and then decide what is best for YOU. Here are MY storeis:
We've never experienced smoke as a problem on our balcony (we've had several) and always get a balcony when we can.
We've cruised without cruise insurance, but now only cruise WITH it - just not worth the risk. If you can't afford to miss the cruise, lose all your money and pay for another, then insurance is the way to go. And Thomas is correct, the medical coverage is good enough reason alone. It sounds as though you are covered medically (although you might check on the medical evacuation part....), but what if something happens to either one of you, or your children (god forbid) and you can't go on the cruise? You will not get a refund from the cruiseline and that is where insurance comes in handy.
Enjoy your cruise and your time with your husband!
Carnival Elation March 11
Carnival Imagination Sept 07
Carniival Sensation Dec 06
RCI Sovereign of the Seas Sept 06
Carnival Miracle Sept 05
Carnival Glory Sept 04
Carnival Fantasy Jan 04