My oldest daughter has been at all three of her siblings births. One was at the hospital. The other two at home. For my first homebirth, my mom was there and she was pretty much dedicated to taking care of dd. My daughter would come be with me a lot then she'd alternate to my dh then mom. Towards the end when I was really noisy, she'd stay with mom, but she did great. My son was 23 months at that time and super, super clingy. I felt bad because I knew my son would want me throughout the day, but I also knew he'd be very needy, so my dad took him for the day (my dad is WAY squeamish about pain and blood anyway!). He actually did pretty well. He cried a little a first, but then they had a fun day.
With my second home birth, I had two friends there whose responsibility were my children. We prepared them for what the birth would be like, then we involved them in making a "snack bag." We bought a bunch of snacks that would be just for them and the birth team - they thought that was so cool. Once I went into labor, they started digging in the bag!

We were very laid back about them being there or not. They got to watch movies if they wanted. They could also come and go as they pleased in the birthing room. My oldest daughter stayed with me a lot - especially at the end. She was almost 7. My son who was 4 1/2 came and went. At the end, he decided to stay downstairs. My two year old decided that I didn't exist when I went into labor!

She kept denying that the baby was being born. After my friend brought her up to see the baby though, she was totally in love. It was adorable.
Okay, wow, that was long winded. Good luck.