Since you're mostly interested in tax benefits, let's start with those. There are no tax benefits to paying your mortgage off early. In fact, you lose the deduction for mortgage interest sooner. However, paying off your mortgage early is a good idea because you get a major debt out of your life.
The tax benefits of a 529 plan would be that the assets in the plan grow without taxation. So, if you have 529 accounts, the interest, dividends and other income earned by those accounts won't be taxed to you in the year they are earned. Further, if the money in the account is used to pay "qualified expenses," (which basically means tuition and fees, books, and living expenses of the student), it is never taxed. If the money in the income is withdrawn for any other purpose, you have to pay federal and state income taxes and a 10% penalty.
Logically, it's best to take care of your retirement first by maxing out your 401(k)s and paying off the mortgage asap. But the relationship between parent and child isn't based on logic. If you're uneasy about not having money specifically designated for your kids' college expenses, open 529 accounts. Find inexpensive ones (Utah seems to offer about the lowest cost plan; and you don't have to be a Utah resident to have a Utah 529 account). An inexpensive 529 plan will be as good or better than taxable investments for the purpose of college savings. If you want to open 529 accounts, start now. That way, you'll get 14 or 16 years of tax-free growth from the account assets. If you wait 8 or 10 years to open 529 accounts, you lose a number of years of tax free growth. I'm not trying to give you the hard sell on 529 accounts. Lay the foundation for your retirement first. But 529 accounts give you the biggest tax savings if you start when the kids are young.
By the way, you don't have to choose between 529 accounts and paying off the mortgage. If you can save an extra 10K or 20K a year, you can do both. Just split the extra savings between the two purposes.