Few quick things. Don't use a spray bottle as punishment - you'll want to use a spray bottle for grooming as he gets his full coat and the last thing you want is him to be fearful of grooming. Also, his growling is not a bad thing. It's his way of saying I don't really like this situation, he's probably given other more subtle indications that he's uncomfortable before this but they aren't being picked up. If you prevent him from giving these signs that he is uncomfortable then what's his alternative - to bite? Be his protector, when he growls let him know you'll take care of the situation, no need for him to manage it, and lead him away.
The issue with your husband being away - is that the only time it occurred? He could be going through his adolescent fear period, where things that seemed okay a week before is suddenly scary. Sorry, I don't have time to do a search for you, but I know there was a thread recently where the fear period was discussed, have a look in the behaviour section.
Nipping could be herding behaviour - just keep him on lead when the kids are running around if you don't want him to nip. As for people saying he was an awful dog - blow them. You are his protector, ignore what the nasty people say. He's still a young dog, going through adolescence, it's a tough time. He's also a herding breed and by nature they stand back and take things in, get the lay of the land and a view of the situation, not jump straight in like a Labrador. Plus people tend to crowd in and hassle a young dog, wanting to pat him and focus on him - they should just leave him be.
When your family comes to visit make sure he has a space where he can go when he needs to get away from the hustle and noise. Don't let them crowd him straight away, let him get used to them first.
Finally, don't give up. So very many dogs are dumped at this age because people just don't understand how difficult adolescence is for a dog. His brain is growing and changing, he's trying to understand his place in the world, it can be a trying time - just like it can for humans. But remember, like humans they grow out of it, and fortunately much quicker than a human. In the meantime just be understanding. And have a look through the behaviour forum - you'll notice how many threads there are by people with similar age dogs who are going through a range of adolescent angst issues - you are not alone.
