We live inland, with very few expats around, and those that do live here live mainly in the campo. Our friend Jaqui has an 11 year old daughter and they have been living here for 7 years, so all her daughter's schooling has been in Spain. Children living in Jumilla (Murcia region) are taught English from a young age, and one school is in the process of becoming bilingual. Jaqui works in a private academy teaching English to children of all ages and also gives private lessons. Both her and her daughter Melissa speak Spanish (and English) fluently. At one stage though Melissa had to have extra tuition to improve her reading and writing in English. Melissa is the only English child in her school and is very happy there.
Children can adapt to moving about so long as they feel secure at home. I was born in the Northeast, moved to Canada with my parents when I was eighteen months, returned to London when I was almost five, then moved to Norfolk. I went to two different schools in Norfolk before moving to Louth in Lincolnshire. We moved to Horncastle, also in Lincolnshire, when I was nine so by then I had been to four different junior schools. The only time I was bullied was when I went to the local Grammar School, as my last junior school was a private one and they thought I was "posh". Most of my friends had gone on to boarding school, and I was the only one moving to the Grammar School. I lived to tell the tale though!
Funnily enough, after moving about so much as a child, I decided I wanted to continue travelling and joined the WRNS when I left school - my second posting being to Gibraltar! I enjoyed myself in Gib (well, I was 20 at the time!) though having been back when we were holidaying on the CDS I don't think I would want to live there now. We like the Estepona area as it still feels very Spanish there (we did visit off-season though!)
According to ViaMichelin, it will take you 50 minutes to drive from the centre of Estepona to the centre of Gib, though that probably isn't allowing for morning traffic and crossing the border! There are also buses towards Gib, which stop in La Linea. I think the company is Portillo (?)
http://www.viamichelin.es/web/Itineraires?strStartLocid=31M3ZscTEwY016WXVOREkwT0RFPWNMVFV1TVRRME9EST0=&strDestLocid=31NHN3NzYxMGNNell1TVRJMk9UUT1jTFRVdU16STVNVGM9&intItineraryType=1&caravaneHidden=false&vh=CAR&strVehicle=0&itineraryCarType=0&itineraryFuelType=0&isFavoriseAutoroute=false&isAvoidPeage=false&isAvoidVignette=false&isAvoidLNR=false&isAvoidFrontiers=false&dtmDeparture=23%2F01%2F2011&distance=km&devise=1.0|EUR&indemnite=0&carbCost=1.3&autoConso=6.8&villeConso=6&routeConso=5.6
Although we love where we are living it is easier for us as we have both retired, so our limited grasp of Spanish (even after two and a half years here ) isn't too much of a problem, as we speak enough to get by on a daily basis. If you are working in Gib you should be OK too, however I do recommend learning as much Spanish as possible before moving as it enhances the whole experience of living here.
Good luck, and please keep us all updated!
Sue