The wall solution will likely provide the best results, however I would suggest researching the following
- Additional egress exits may be required when you turn 1 room into 2 to meet building code (Extremely important, as those codes are written to make sure people can get out of a building safely and quickly in the event of a fire)
- HVAC (as previously mentioned) may not function properly depending on where the supply/return diffusors are located in the ceiling
- HVAC ducts may also transfer sound easily between rooms, which might require lining the ducts with fiberglass, or re-routing the ducts (both of these may require consulting with a mechanical engineer to see what that does to pressure losses and if it might affect other parts of the building)
Personally, my first though is to try replacing the current ceiling with high NRC (min. 0.9) /CAC (min 30) acoustical ceiling panel, and some 2" fabric wrapped, fiberglass panels along the walls (high enough that kids can't reach them). That'll limit some of the sound from bouncing from one end of the room to the other, and it's cheap. In addition, adding a pony wall (high enough so there's no line of sight from the kids eye level across the room), may help direct sound as well.
The next step would be trying a sound masking system (Cambridge makes a fairly cheap one that's pretty easy to install). http://www.csmqt.com/
Other manufacturers are Dynasound and Logison (pretty sure Cambridge is the simplest and cheapest though)
The idea here is ceiling mounted speakers throughout the room, and playing back noise (with a very carefully set EQ so it's not annoying like most HVAC noise). This helps sound from one side of the room not to be heard on the other side of the room as easily.
Very come to use in open-offices, where there are no walls, but people still want speech privacy.
Like I mentioned before though, a permanent wall will be the best sound isolation, but I think professionals should be consulted first to check Egress and HVAC first.