I thought I'd try to answer these also...
do i use the protein skimmer?
no, like Joy said, no real need in FW
bio-wheel or under gravel filter?
Neither, I would use an Aqua Clear brand filter, like Joy said.
do i let the water cycle?
Yes, use one of the methods Joy listed, fishless being the best for your fishy friends. You can use other methods but they take much longer. The stickies have some great resources as far as fishless cycling is concerned. You can also jump start the cycle by using media from another established tank.
anything make fw better?
The thing that drew me toward FW is the ease of maintenance. Really only need to keep up on water changes and the occasional trimming if you go planted.
best fish combination for kids?
This is really personal preference although I imagine some brightly colored fish (guppies, tetras, some cichlids) would do best. There are lots of options there but it really comes down to what you want. I must admit that I really like the look of a cichlid tank with all the different color varieties available but you are limited to just cichlids due to aggression.
plants? lights?
It really depends on what type of plants you want in your tank. I'm not a plant expert by any means.. I have some java moss and Amazon swords that are growing nicely in my tanks with just the stock lighting. If you get to a higher light level you may need to add CO2. The planted forum has some great stickies also.
Good luck and post back with any more questions.