We recently decluttered for the same reasons, our 5 and 7 year olds had WAY too many toys but I had such trouble even thinking about getting rid of them. So what we did was start with one room, we emptied it out of all toys, then carefully put them back in. We had different bins for different things...for instance, in my DD's room, I had one bin for my son's stuff, one bin for pieces of things, one bin for donatable stuff and one for obvious garbage - then just unsorted bins for the rest. As we emptied the room, we were sometimes able to sort the items into appropriate bins or we just threw them into bins that we sorted later.
After the room was empty, we cleaned it entirely, including moving furniture and vacuuming. Then we started putting it all back, sorted thoroughly.
After doing the first room, we did the same with the second. We ended up with quite a bit of garbage (broken toys etc.) and a small amount of donatable toys but surprisingly, at the end, once it was all sorted, we were surprised to realize that it fit back quite nicely and spaciously and we really didn't need to get rid of as much as of it as we thought we would.
This was an entire weekend project for the two of us, we didn't get the children to help us much, we just decided to give them a couple of special movie times to help us focus.
As for the things that we did give away or throw out, we actually asked the children if they were willing to give certain items up to donate and they were perfectly willing to get rid of some things that they have outgrown or never play with. Once your children's areas are tidy and organized, they will be so happy to play in them again that they will probably be quite willing to let go of some of those extra things.
Another idea if to pack up some items that are less frequently used and see how long you can leave them hidden in a closet or the garage without having the children ask for them. If they don't miss the toys, then you can probably give them away without incident.