Well I don't know about the controllers, I can tell you something. I have been playing video games since the the first release of Nintendo, gameboy, sega master system... , until now that I have a Playstation 2. I can assure you that I have never seen a console with the same entertaining power as PS2. It's just amazing. This is definitly a very good choice. I have been playing the new Metal Gear Solidons of liberty, and you just need to see it to believe it. I so excited about this. If I were you, I would definitly buy PS2 for your kids. lol
I know you can use the PS1 controllers with the vibrating function, not sure about the older ones. You will however have to get a PS2 memory card for the PS2 games. Your PS1 memory card will work on PS2 but only for PS1 games.