Hi Karen,
You need to work with a skilled positive reinforcement trainer to come into your home and get your puppy back on track. There are certain topics that lend themselves to help on the Forums, but aggression often needs the assistance of someone in your home to help. You don't want to waste time and make the wrong decisions. Your dog is young and you also have children in the home. This needs attention ASAP. Keep in mind, however, that aggression doesn't just quickly get resolved, however. It might take some time before he is completely comfortable. As long as you are making progress and there are no more incidents, you will eventually reach your goal.
Also, do not do any more scruff shakes or alpha rolls. Read this post.
Also, why did you say you can't put him in the crate? Puppies should be in the crate when their people can't watch them and in cases of management, housetraining and to prevent separation anxiety. Read this post.
Listen to my radio show about aggression.
You can also purchase my Puppy Biting video.
Look for a trainer in your area. Check references, watch classes, stay away from choke chains, prong collars, shock collars, "dominance" trainers, trainers that say, "you have to show him whose boss".
http://www.sfspca.org/academy/referral.shtml
http://www.apdt.com/po/ts/us.asp
http://www.clickerteachers.net/
Let me know if you have more questions, and good luck.
Jeff