Heres a reply from the passport office I mailed them last night

So again, I take that we are ok for July with the kids on my wifes
passport

Thank you for your enquiry.

From 26th October 2004, All children will require a passport of their own to
enter the USA, a child will be refused entry to the US if they are included on
an adult passport and do not have a passport in their own right.

If you are planning to travel to the US with your child/ren after this date you
will need to apply for a new passport for your child/ren.
If you are still unsure, you can contact the American Embassy on:0207 4999 000
Thank you.