Yes. Better to keep the garden free of "kids" and reserve it for the more discerning customer who wants a quiet drink without getting beer spilt down them after having their table "nudged" by one of the little treasures.
Also, ban smoking in your pub's garden too. You'd be surprised what it does to your takings once word gets round!
I know a number of people in the licenced trade who have gone down this route. They've been pleasantly surprised with the results.
Not everybody who likes a drink particularly likes to be surrounded by "kids". Indeed many of them go out precisely to get away from them (having paid a "baby" sitter)and they are often disappointed.
You do not need Public Liability Insurance by law - although it is wise to have it - as this will protect you against claims from children jumping off it etc.
Your standard Public House Insurance generally will not cover you for a Bouncy Castle as standard, you must speak to your broker and get them to include this as an addition to the policy. You will probably end up paying more to insure it than the extra business you would make as a result of it