If you're the type that needs your sleep, YMMV, but I am now the father of four and still a co-founder, so here goes ...
NOTE: This is scattershot advice mixed with personal reflection. Salt liberally, expect typos.
I started working on Stormpulse in 2004 as a hobby project a few months after we had our first child. She slept horribly for the first two years of her life--very difficult to get to sleep and woke up a lot. The 'cry it out' method DID NOT WORK for us (some people insist that it works for all, but it doesn't. If it doesn't for you, know you're not alone). Get this DVD and watch it: http://www.google.com/search?sourceid=chrome&ie=UTF-8... (It could easily be titled "Hacks for getting a newborn to calm down and go to sleep." Worth every penny/second you'll spend and really easy stuff. Seriously, this is very important: watch this DVD--I just got out of bed to include this link because I would feel bad if you didn't know these amazingly powerful tricks that could spare your sanity many times over.)
I worked a full-time job and kept hacking on SP on nights/weekends through 2006. 2006 went full-time on the startup and it was fantastic because I got to spend a lot more time with our first than ever before. Times at the park on Tuesday mornings when everyone else is in their cube are really wonderful bonding times. You can give your wife a break by taking the kid on an errand. Love is a trip to the grocery store with the baby to give your wife a 30-minute break.
Our second was born in early 2008. I was back at a cube-job (though a great one) so I saw him less in the first year of his life than I might have liked, but by 2009 I was full-time on Stormpulse again (and have stayed that way). I won't lie, it's incredibly difficult. The hardest part is REALLY BEING THERE for your family even when your brain is screaming for you to work on the startup. Don't panic. Be there. Make lots of eye contact and actively listen. Your baby will quickly become a toddler that knows the difference between a mindless/reflexive "uh-huh" and real participation. It's better to stop for 30 seconds, get down and give them a hug than to spend 10 minutes saying 'one second, hold on' as they tug at your leg. Often they just need that 30 second re-connect.
Despite what I've just said about spending day-time hours with the family: work away from home if you can. The separation can be a very necessary thing. I was able to do this in an office very close to home until 2010. This year we had twins. They're 7 weeks old now. I am working at home and for the first time ever, it's working. Quitting HackerNews and Twitter can be life-saving steps. No time for that stuff (I've been up since 3:30am and am talking with my co-founder on AIM--I'm about to go back to sleep until 7:30am or so, I hope).
Let your startup fail before you let your family fail. Stormpulse hasn't failed yet, but I've had to 'give up on it' a couple times before I've been able to have a solid enough financial footing to launch into it again. Now we're at a stage where I don't expect to go back to other work and it's the absolute best setup for our whole family (we see how it contributes to Daddy's involvement at home, rather than how it takes away). I was fortunate to at least start while our first was very small, so that my wife went through that early time where all I did was work or moonlighting and the kids know a gentler reality of "Daddy works but he's also around a lot".
One final thought--when things get tough (time pressures, children aren't behaving, whatever), never blame your wife for anything, ever--even when it appears supremely obvious that she's at fault. Instead, take responsibility and figure out what you could have done differently and what you can do differently going forward. That has gotten me a through a lot of difficult times with family + startup. Giving and sacrifice are the new norm, but once you're there you won't have it any other way.