If you think it's something your kids will learn to love for a long time I would strongly suggest a real piano. I would also suggest you check out the Foothills Piano Shop. I thought it was a great experience, and you won't get fleeced.
I had a pretty high quality electronic piano when I lived in an apartment and it just wasn't the same. I loved getting the chance to play a real piano when I went back home.
Also, my two oldest have been playing violin since they were 4, and it hasn't been bad. Now my oldest is 8 and she's really nice to listen to. I also think it's easier for a violinist to go to the piano than the other way around. Violin is one of the hardest instruments I've ever played.
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