For kids cakes, I use gumballs. They come in all colors and are relatively cheap. You can see them in my Hello Kitty Zebra cake.
Just read about these the other day. Use a round cutter to cut fondant circles and then roll into balls. They should be equal size.
Yep, but it actually doesn't even need to be a round cutter. It can be any shape, just as long as it produces a ball of fondant the size you want. Of course, it's also best to roll your fondant out to a uniform thickness first, too. 
I also make fondant balls for my borders sometimes.
I use round cutters as well if I want the balls to all be uniform. If I am making a funky cake that doesn't need to look "perfect" then I "free hand" the balls to make them more "unique"..
You can also get silicon molds that make the string of balls. They make things quicker if you are pressed for time or don't want to hand roll hundreds of balls for your cakes.
HTH
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