E.,
I was lucky to have my mother take care of my daughter from 3 months to 8.5 months old, at which point, it was too tiring for my mom and I had to find an alternative. My daughter is now 17mo and has been with one of two nannies since 9mo.
I looked into several daycares and found that with a 4:1 or even a 3:1 ratio, there were babies that were crying or needing something that could just not be attended to because the staff was attending another child. I was afraid that my daughter had received such personal care (from myself and my mother) that the transition would be too difficult for her. For example, I let her nap on her own schedule (which she was really good at being consistent and moving herself down from three naps to two) and at daycare, the babies are set down for nap time and then they are gotten up at the end of nap time, whether they slept or not.
I set about finding a nanny for a couple of days a week. I used GoNannies.com and then conducted my own reference checks and background checks. I have been very fortunate to find two wonderful nannies this way (I lost the first one to teaching... I knew that going into it with her, though).
I think that my daughter received much better care from the personalized attention and she was cared for the way I wanted. She learned sign language very early on (her first sign was at 6mo... this was from my mom and I working with her together) and both nannies have encouraged the signing and worked with her on anything that I have asked (for example, I've recently started a reading program with her and my nanny does some of the cards with my daughter during the day)
My daughter really likes the nannies and is very well-adjusted. I heard from various people that I shouldn't use a nanny because my daughter wouldn't get good socialization skills (probably not a concerned of your since you have 3 children), but, in fact, she does great around other children - in her signing classes and at parties and other events. I think she is very confident and secure getting to stay at home while I am at work.
Now, to address those Oprah stories... I did set up a web cam in my house and varied the location in the beginning because I was so nervous! And, I would check it often during the day, but, I think it comes down to doing due diligence in hiring and listening to those gut feelings during the interview process. There were several that I interviewed that I knew almost immediately that I would not feel comfortable leaving my daughter with them.
Both of my nannies have brought very different backgrounds, skills and benefits. My first nanny was a 26yo newly-wed from Pennsylvania who had just moved her with her new husband and was looking to get a teaching position, but had been a nanny throughout college and after. She already knew some sign language and, as a teacher (she was certified for elementary school) brought her educational knowledge with her. She really eased me into having a nanny by her work ethic, diligence and enthusiasm for daugther. She truly cared for my daughter and even brought her a birthday present after she was no longer in our service. She also put up with my calling 3 or 4 times a day to "just check in" and always gave me a detailed report of how my daughter was doing and what they had done together.
My current nanny is here from Mexico, is 31 and has 4 children. Her husband owns his own car repair shop and her mother lives with them and takes care of her son while she is here taking care of my daughter. She takes care of my daughter as if she were her own - wanting to see pictures from various occassions and even calling on the weekend when my daughter had the rotavirus to see if she was better. She did not know sign language but thought it was wonderful that my daughter knew it and learned it very quickly so that she could "converse" with my daughter. I have enrolled my daughter in a Spanish-for-toddlers class and my nanny volunteered to work with her during the week (she already reads to her some in spanish).
I apologize this is so long, I guess I just got on a roll here, but I've been very happy with my decision to go with a nanny and think it worked out the best for us. As another poster pointed out, it might be more economical to go with a nanny than day care for three children as well.
Feel free to send me a message if you have any questions (as if I haven't said enough already!). Good luck with your decision. I know it's tough trying to decide who to trust with your most precious of cargo.