We ended up using a family account for iTunes so apps and music can be shared. I only fund it with gift cards so it is not linked to any bank accounts (I did this anyway previously). The in-app purchases are disabled and a password is required for any purchases, even free apps.
Then they each have an apple ID that is linked to the iCloud. That way their backups are separate, if you do messaging or photostream it will be separate as well. I think I had to lie about birthdates to get them to work, but the kids don't really have access to them at this point. They don't know they exist and don't have the password.
Mama to three boys ('03, '05, '07)