J.W.
It is hard to expect grandparents, depending on their age to take on raising a child for 15-20 years - I understand! And while my husband and I have some fantastic siblings, that really are wonderful, they do not always value the same things we do, and we don't think that our children would be raised exactly/(or even close to) the way we would raise them, although we know they would be loved. We chose my college roommate and her husband because they have same thoughts on many important issues, and we know they will push our children to succceed in life and have the happy loving home we would want for them.
And the most important thing when having that discussion and planning that with someone is to make sure of 2 things - that you have adequate insurance, and that your wishes are in writing. I don't think any state gives the children to the godparents above family unless specifically drawn out and signed and witnessed.
It may be expensive, but is worth sitting down with a professional lawyer to make sure your will says exactly what you want - down to insurance being put into trust for the child, and the name of the executor, etc. You wouldn't want the godparents to get the children, and someone else get the insurance!
By making sure you have adequate life insurance, you help ease the burder (although it would be a labor of love) on the new family, by helping to make sure that day to day expenses are met, as well as perhaps creating a nest egg for college!
Make sure you and your husband are completely on the same page, and then reach out to the person/persons who you feel are best capable of raising your children in a loving environment with as close to the same values as yourselves. Let them know specifically why you think they are a good match, and let them know that you are doing your best to provide financially in such a situation, so that they do not have to make a decision with a 200lb weight of worry about "how could we ever afford that".
And remember, you can always change that information. If 5 years from now someone more suitable comes along, or your original choice ends up not being as suitable, you can change it!
The most important thing, above all, is that your children are raised in a loving, warm home, and given what they need to be successful functioning adults. Hurt feelings aside, which isn't easy, do what is best for them, and there is nothing wrong with keeping the arrangement between you and the other person, as long as it is clearly recorded, and you have a copy, as does the other person.