Depending on your income, you may qualify for the earned income credit which you can still claim if they aren't on your return as a dependent, provided your EX isn't filing for that credit also.
The non-custodial parent does not qualify for the Earned Income Credit, as qualifying children must live in the household for the full year. The custodial parent can claim the Earned Income Credit, regardless of whether or not the qualifying child is claimed as an exemption, if the custodial parent's income falls within the income range for EIC. There are exceptions, though. Ex: Mom and qualifying children live with Grandma, who also has a qualifying child. Grandma is actually the head of household, and earns more money than Mom, while still within the income limitations for EIC. Grandma is the one entitled to claim the EIC.
If the custodial parent's income is low enough, it may not make any difference whether or not she claims the children as exemptions. If she can file as Head of Household, she gets a break there on the standard deduction (if itemized deductions aren't more than the standard deduction). If she pays for child care, she can claim the Child Care Expenses. If her income is within the EIC limitations, she can claim the EIC.
My exDiL went to H&R Block a couple of times, but they kept telling her that she couldn't claim EIC, as our son claimed the children as dependents. She got so bent out of shape because "it wasn't fair that son got to claim the kids" <img src="/ubbt/images/graemlins/rolleyes.gif" alt="" /> that I finally told her that I would do her taxes for her. Her taxes were always $0, because she only earned a few thousand per year, but she was entitled to the EIC.
Do a sample tax return to estimate your tax liability and see if claiming the kids as dependents would help you taxwise. If you have more than one child, perhaps you and your H could agree to split the exemptions.