Allison,
Beth did a great job of answering your questions! Often the replies on the board are pretty quiet when the questions pertain to Preparing..., as the moms don't have their guides in hand yet! So, I'll jump in and answer your questions.
If you are considering Singapore Math at all, I would give it a try with your 2nd grader now. It is easier to start with Singapore earlier on, than it is to switch over to it later. I'd give the placement test and place your child where he comes out based on the test. The Singapore Placement test is very accurate. For kiddos who do not appreciate a lot of rote work, and who enjoy thinking through problem-solving, it is an excellent option. Here's the link to the Singapore Test:
http://www.singaporemath.com/Placement_Test_s/86.htm
As far as spelling goes, I think your 5th grader should be fine with one of the levels of studied dictation passages provided in the Appendix of Preparing. Studied dictation is definitely harder than it looks! My oldest, who is going into 7th grade this year, did the highest level of passages provided in Preparing last year as a 6th grader. He is a good speller and good at copywork.
As far as grammar goes, I'd do either Rod and Staff Level 3 or 4 for your 5th grader (both are scheduled in Preparing), unless you are very drawn to the Queen's series. We look at the Queen's series as more of a review, rather than a formal grammar program. It is fine to use on alternating years with a more formal grammar program like Rod and Staff, but I would hesitate to use it as my sole grammar program, especially as kiddos head into the middle-upper elementary years.
If your 2nd grader is a good speller, then that child could use the first level of dictation passages provided in "Preparing...". This is the entry level of dictation passages and is the same as the first level provided in "Bigger". Your 2nd grader will also need either the Queen's or the Rod and Staff 2 for English. I would probably do the Queen's and hold off on Rod and Staff 2, until your little one is in third grade. This is because your 2nd grader will not be able to do most of the writing required in Preparing..., so your 2nd grader will benefit from the copywork lessons in the Queens book. Otherwise, the Queen's books usually overlap quite a bit with what we've scheduled in the guide.
It is important to note that the target ages for Preparing is ages 8-10 with extensions for 11-12. So, your second grader is younger than the recommended age range. This will mean you'll need to be very mindful of that fact and modify accordingly, if your heart is leading your family to combine your kiddos.
If you have other questions, ask away!
Blessings,
Carrie