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I have no clue what to buy in that price range- BUT- I will say to try to also get the best autofocus system you can. I had a Canon 5dII and went to a 5dIII- which had a significantly better autofocus and it made ALL the difference.
The high ISO and wide open 50 prime is the way to go. With babies, you can set things up because they don't move as much, but as they become toddlers and move around, you need to really have a quick shutter speed to capture the moment. It amazed me how much info there is on the internet about taking pics of infants/toddlers/etc.
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