What they should wear is entirely up to you. I do encourage you to keep the clothing changes to a minimum, perhaps no more than two or three, especially with younger children. Remember that we want to focus on your child's face not so much on the clothes.
The session will take as long as it takes to capture the best expressions and poses. I urge you not to rush your children, let them warm up to me at their own pace. Most sessions are done in 30 minutes. Some may take longer , so it's important that you relax and enjoy.
If your child is not a smiler thats OK. The very best and most favorite expressions with many clients are always the more serious, contemplative looks. Especially with children. When you look at the classic works by master painters from years ago to even modern artists of today, you never see a big toothy smiles. The best way to get great smiles is by playing games, singing songs, anything they love to do. Never a "sit and say cheese" approach.
If you feel you need to be present at the photo session thats ok. But, for older children I usually create the best results when Mom and Dad are in the next room. For younger babies it's always best to have you help out during the session. Only one parent is really required. Also, if you have any pets, they are always welcome in the photo session. It helps the kids to relax as well.