I've just found this discussion, and how interesting and varied everyone's answers are!
Although I crave quiet and tend to write best when my husband and kids are out of the house, I have grown used to writing with them around and like others here, can cope as long as no one tries to engage me in conversation.
Two years ago, a friend called to offer me the chance to spend a whole week up in the Highlands at an isolated cabin she was renting. Her boyfriend had cancelled at the last minute, and she needed a companion. My husband and kids were fine with this, and I was thrilled: a chance to write in peace for a whole week, in a beautiful area! When we got there, the place was fantastic. Utterly quiet, in a secluded area, surrounded by nature. I got out my laptop and got right down to writing.
I think I managed about two pages, and I had to delete them afterwards because they absolutely sucked. Clearly, I needed the noise and chaos of my family in order to manage decent prose.