Actually the taxes are a big problem. I work in Canada, and as a US citizen, few banks want to do business with me because of the reporting requirements imposed on foreign banks by the IRS.
Also, if both countries have the draft, you could become a felon in one while serving in the military of the other. Lastly, if your kids do serve, then as dual citizens they could be construed as "enemy combatants" not subject to the Geneva convention.
renouncing your citizenship is very expensive as all taxes come due immediately - that means any capital gains are due in cash NOW. The total bill from the IRS can be tens of thousands of dollars.
Honestly, and I say this as a naturalized US citizen who went through hell and high water to get a US passport, if your kids have no plans to use their US citizenship, then don't do it.