Motherlode in the NY Times has an article here describing a survey that showed most people think the ideal situation for small children is a mother who works part time.
Both parents working doesn't just impact children when they are small.
Because I worked full time while (with my husband) raising three children, it meant that we could put all three through college without them having to take out loans. There is a huge, long-term impact from that in terms of the financial security they are now able to build.
We were able to pay for their weddings. They have taken jobs far distant from us, and from each other, but we are financially stable enough to visit often, and support family reunions. We can also help them financially, if they need it.
Also, I see now that my daughters and daughter-in-law (all mothers with young children) work full time. I like to think that I was a good role model for them. They are building security for their families and their children are doing just fine.