CAAW,
You have to do what you feel is right for the children. Personally, I would have been a lot happier (and less depressed) growing up if my father had left my alcoholic mother (She was completely functional just like your husband by the way).
Personally, my mother's addiction to alcohol has actually turned me off from drinking (too afraid to follow the same path) though I have developed my own coping mechanism (overeating)
Also, if you do decide to stay with him, make sure that you are ALWAYS there for your kids. No matter what.