OK, here are my answers!
#1 - we use software purely for fun and recreation - however, if it happens to back-up a skill they need help with, GREAT!!!
#2 - not really as we limit their tv, computer, and video game time. Most days they have to choose one of the 3 options. Tv is limited to 30 minutes of non-instructional per day (and up to 2 hours per week of eduational videos I pick), video games to two 15 minute periods per day (if they don't use computer), or computer for up to 30 minutes per day. Obviously, computer reasearch and whatnot don't count - just game time. Sometimes I slack though, especially when I am dealing with another sibling or need a rest.
#3- kids are required to spend 30 minutes after lunch outside playing, as well as the time between 4 and 5. most of the time all their free moments are spent playing outside.
#4 - I like the Tycoon series (even my 6 yr old enjoys these), Disney PhonicsQuest, the Arthur read-alongs, and many of the JumpStart titles (though not all). I also like the Age of... series as well for older ones. We make a lot of use of word processing programs and graphic designs programs as well.