Canon 5D camera, Canon 200 f2.8 (great for outdoor portraits on full-frame), Shooting mode Aperture Priority (so I could set the exact aperture I wanted), Aperture f3.2 (this wide aperture gives me the blurry background), Shutter speed of 1/500 of a second (selected by the camera), ISO 800 (it was getting dark and I wanted at least a 1/300 shutter-speed to avoid photo blur due to camera shake @ 200mm focal length), Exposure compensation of -1/3 (the camera wanted to make the photo too bright), White balance of Cloudy (Canon 'auto' white-balance would have made this photo much 'cooler').
Don't be afraid to mount the telephoto lens for outdoor photography of the kids - I typically mount my 200 f2.8 prime when I'm hiking with the kids (I have my other lenses in my backpack if needed.) Here's a post on some of my favorite telephoto lenses if you want help figuring out what to buy.
Don't rely on cropping back at the computer to 'get close'. You'll get the best results if you frame the shot correctly when you capture it.
Sidebar: If I had been using a APS-c sensor body (Rebel XT, XTi, XSi, 10D, 20D, 30D, 40D) for this photograph, I would have used the Canon 135 f2.0 @ f2.0 to get a very similar photo.