My ds1 was 4.5 when ds2 was born. We were completely open to the possibility of having him there for the birth (a homebirth). We watched videos together, talked about it, prepared him for it.
In the end though, he wasn't - as I was getting into the birth tub and about to start to push, dh asked me if I wanted ds1 there (he was in the playground with my MIL, and he had been in school during the bulk of the labor). I said "no" - (he asked me again, to make sure - as he knew it was my initial desire to have him there for the birth). I guess I was really engaged with the rhythm of my contractions and I just didn't want to do anything to change that rhythm (ds2 was born 30 minutes later).
A couple of minutes after the baby was born, ds1 was there, able to greet his baby brother while I was still in the birth tub. As ds1 walked in, he saw the tub and announced "Hold on everyone, I'm going to get into my bathing suit!" (he obviously hadn't seen the bloody water and such...). My midwife quickly distracted him and he got to cut the cord!
ds1 is now 5, and the baby is 10 months. Last week, ds1 said to me: "Mom, when you're birthing again, and you're in the birth tub, I want to be there when the baby comes out." We've watched our birth-story many times since with ds1 and he has many special memories about the experience, even though he wasn't there for the actual birth.
You can see our birth online (we were on "A Baby Story) (but those tidbits I just described were not included in the final cut of the show) :
Part 1
http://www.youtube.com/watch?v=YtLyOyfHkZY
Part 2
http://www.youtube.com/watch?v=ux9xlvqGuUY&feature=channel
Part 3
http://www.youtube.com/watch?v=Ur5Ur...eature=channel
part 4
http://www.youtube.com/watch?v=15J77...eature=channel
Part 5 (Bonus) (out-takes)
http://www.youtube.com/watch?v=dVoPHJwq7RI&feature=channel