I started a new character after downloading Hearthfire now all the kids in my game are running around in their skivves. Its nothing major but its odd to walk into town and see an almost naked kid running around.

I don't know if you've adopted yet, but on 360 when this happened, if you give your adoptive kid one piece of clothing (and not give any other gifts at that time), that may fix it.

Does that fix all the children or just the ones you adopt? Every kid in my game are like that it appears that they just escaped Kevin Spaceys basemant j/k lol

I think someone mentioned it fixed them all in his game.

Happen to have any mods that alter any of the childrens' outfits?

the same thing is happening to me. i downloaded hearthfire and kids are running around in the nvde, no mods installed at all and when i give my kid a gift their body becomes invisible until i leave and return after a few days then their back in the nvde, this is worse than the courier bug

Nope. I even tried to use the console to redress the children and that was a no go

Then either Bethesda needs to issue a game patch soon to fix it on their end or a CK update soon because the childrens' outfits aren't possible to edit with the current CK.