I'm running Rise of the Runelords currently; we've just finished Burnt Offerings and are stepping into Skinsaw.
As a throwaway, I included four Goblin children in the nursery, to see how my players would handle it and to stimulate some intra-party roleplaying (one of the characters is a ranger with Goblinoid favored enemy). They ended up taking the four cages back and putting them up in a rented house outside of Sandpoint (where the mage has established himself).
I've got Classic Monsters Revisited, and I've read the goblin entry in that fairly closely. It appears that goblins are nasty due to upbringing rather than inclination (nurture vs. nature). Right now, the little bastards are mostly comic relief and a money sink for the party, but I have a feeling they're going to be asking some questions about how their reformation efforts are going.
I'm inclined to let them succeed to a degree, though the goblins (should they live) will no doubt be irritating and capricious even if turned to "good."
(Honestly, a good chunk of my willingness to let the players "win" is the idea of 4 ~2' goblins fighting with the 6'10" half-orc fighter to defend Sandpoint in chapter 4 tickles me, as well as associated melodrama should one or more of the little buggers survive.)
Anyone else include this element in their playthroughs? How did your players handle it?