For starters, Episodes 1, 2, and 3 are not very good. I'm not saying you shouldn't seen them or show them to your kids, but I highly, highly recommend you start with the originals, 4, 5, and 6.
In my opinion, Episode #2 is the worst of them all. I watched it in the theater when it first came out 13+ years ago and was disgusted by it. As a result, I, until this Christmas, had never seen Episode #3. I just didn't want to bother with it after watching #2. My biggest problem with Episode #2 is the large number of contrived love/romance scenes. It's not that I don't like a movie with romance, but I thought it was overly done in this movie. The topper for me was when Annakin and Padme were rolling around in a field on their picnic. Ug...so manufactured and unbelievable.
There are a few good fight scenes. There's a fight scene with Yoda which is kind of neat to watch, but overall this is just a very bad movie. My daughters enjoyed it, but they'll enjoy any movie at this point in their lives. :-)
To conclude, if you are a Star Wars fan, show your kids this movie, but don't be surprised if they think it sucks too, especially if they watched the originals first.