I think that wikipedia pretty much answer the question.
There are some controversies, but it seems that the majority of the studies points toward a correlation between exposure to DU and the risk of birth defects in children.
Depleted uranium - Gulf War syndrome and soldier complaints
Human epidemiological evidence is consistent with increased risk of
birth defects in the offspring of persons exposed to DU. A 2001
study of 15,000 February 1991 U.S. Gulf War combat veterans and 15,000
control veterans found that the Gulf War veterans were 1.8 (fathers)
to 2.8 (mothers) times more likely to have children with birth
defects. After examination of children's medical records two years
later, the birth defect rate increased by more than 20%
Anyway, I would like to point out that the primary hazard is chemical and not radioactive (from the same page)
The primary radiation danger from depleted uranium is due to alpha
particles, which do not travel far through air, and do not penetrate
clothing. Thus, the primary concern is internal exposure, due to
inhalation, ingestion or shrapnel contamination. Available evidence
suggests that this risk is small relative to the chemical hazard
Environmental and Workplace Health : Depleted Uranium
Insoluble depleted uranium is considered the most hazardous form for
inhalation as it remains in the lungs. A dose of 1 millisievert would
be received from inhaling 8 milligrams of insoluble depleted uranium.
Soluble depleted uranium is the most hazardous form for ingestion as
it is absorbed into the body. A dose of 1 millisievert would be
received from ingesting about 1400 milligrams of soluble depleted
uranium. This route of exposure presents only a small fraction of the
potential radiological risk of inhalation for the same amount of
intake. The relative radiological risks for ingestion and inhalation
are 1:200, if the depleted uranium contains equal amounts of soluble
and insoluble forms.
External exposure to depleted uranium presents
the least hazard. A person could be completely surrounded by depleted
uranium 24 hours a day for a week before receiving a 1 millisievert