I'd probably have posted this in the Pets Forum - or at least started a second thread. Most of us dog training people don't usually hang out in the 'your family' bit. I am looking after a sick child this morning, so just cruisin' EB. Otherwise I totally would have missed this!
Part of your issue seems to be that your dogs haven't really been treated as 'dogs', rather, they've been your substitute children or family. It also sounds like you haven't prepared them for your new arrival.
What I would encourage you to do is get a dog behaviouralist to visit you in your home, and help you to retrain both your dogs. One of the stand out things is that your dogs sit at the same level, or even on you, and that means (to a dog) that they are 'in charge', not you. Which also means (to a dog) its okay to correct human behaviour - by biting, nipping and growling. You need a behaviouralist, to get your 'in charge' back, and to make it a pleasant experience for all concerned.
First off, the best place to start is with your DH taking over the doggy-related chores, and encouraging more doggy play. He needs to build a rapport with your dog, and the best way to do that is via their tummies.

Get him to use treats, and to practice skills such as sit, down, stay etc - and reward with small bits of food for good behaviour.
There are some additional rules that need to be imposed on your household.
1. No picking up dogs. When you pick up a dog, your elevate its status, possibly above your own. A dog is not a toy or a handbag. 4-on-the-floor is the goal, except when helping an animal into the car. A dog has legs, it can walk. Even pugs. Especially pugs.
2. No dogs on furniture or laps. Ever. A dog's correct place is at your feet. Yeah, I know, little dogs seem so cute and they don't take up much space, and they're almost cat-like on your lap. But, in allowing a dog on the furniture and in your lap, you are sabotaging your 'in charge', and giving it to the dog. Again, lots of rewards for being on the floor. Get them a special blanket or cushion, and reward them for sitting nicely at your feet. Remember, you can chat to the dog while BFing, and this will encourage the dogs to see it as their job (ie, sitting at your feet while you BF). No dog is a 'lap dog'. Ever. Not if you intend to have children or other animals in your lap, and relationships with other people. YOu should not be putting this dog in your lap, even when you are not BFing. You are causing the dog to think it has the right to your person, and at some point, you may be putting your baby at risk. So please stop doing this. Pat the dog while it is on the floor.
3.Dog gets fed last. Doggy dinner occurs after ALL of the humans have eaten. Not before, and they never ever should get scraps directly from the table. Or the coffee table. Yep, again, this tells the dog that their status is lower than everyone else.
4. Dogs go through doors AFTER people. A dog should sit and wait for a command to go out, if you're not going out as well, and should only go through a door after you have. I'm personally slack on this one - but my dogs know I'm in charge, so I don't really need to amend my routine. You probably do, because your dogs don't understand that they aren't really in charge.
5. Dogs get attention AFTER the people are finished their activities. Doggy attention-seeking behaviour is to be ignored.
I am sure that a visiting behaviouralist will give you additional things for your dog's personal quirks, but these are the top 4 that are always on the list.
There is a great brochure about
Kids N Dogs, that's worth a read.
I would be putting the dogs away when you have very young visitors. Its pretty easy to injure small dogs, even accidentally, and even when you are supervising them, as you've discovered. What's more, a dog that bites is in danger of being on the receiving end of a PTS order from the Council, if the council receives more than one complaint. The thing which concerns me is that your dog chose not to move away from the child, but rather, it chose to bite it. If it had bitten a child because it was being hurt and couldn't avoid it (ie, cornered), I would be less concerned about the possibility of it happening again, but your dog is a risk without a lot of work on your behalf. There is every reason you should expect that it will bite your child, in the same circumstances unless you teach it how to be a proper dog.
Okay, enough from me - hopefully you have enough to get started. Good luck, and if you want further advice, PM me, or find me in Pets.
This post has been edited by *Spikey*: 21/02/2013, 09:23 AM