Jamie has a good post called "Kids and the Low-Car Lifestyle," about how to navigate public transit with kids in tow.
I confess that I don't really know how I would manage without two cars, but I am aware that the only reason I don't know is that I have not made it a priority to figure it out. If it were high on my list to downsize to two cars, I think we could do it.
It isn't high on my list right now, though.