Guys, there's a lot of misinformation going on here.
First, you can file I-485 in B status. My wife was in B-2 status when she filed her I-485 and there was no issue. However, if you file an I-485 very soon after the entrance in B status then BCIS will legimiately consider the B entrance fraudulent. Generally speaking, immigrant intent actions less than 60 days after admission are perceived by BCIS in a way that the onus is on YOU to prove that the original entrance wasn't fraudulent.
You probably want to file an I-539 for the wife and kids requesting a change of status to H-4. This will set you back $110 or so. Once this has been received by BCIS, file the I-485.
No need for consular processing. CP can be risky for your family if you lose the H-1 job for any reason.