During the events of Paper Mario, Bowser steals the Star Rod from Star Haven. Because of Bowser's interferance, the Star Kids do not have to power to ascend to Star Haven anymore. Like in Super Mario RPG: Legend of the Seven Stars, the antagonist eliminated the power of granting wishes. And in both games, the protagonists must fight to get wishing back.
The most notable Star Kid is Twink. Twink is the Star Kid that helps Princess Peach through-out the game in secret. As with the other Star Kids, because of Bowser, he cannot grant wishes yet. But, Twink does all he can to help Peach. Peach and Twink usually help by finding out where the next Star Spirit is being held. Twink then goes to tell Mario where the Star Spirit is. Twink also gives Mario the Lucky Star, giving him the power of Action command.
In Chapter Seven of Paper Mario, a group of Star Kids pose to be a being called Monstar outside of Starborn Valley. Monstar looks like a threatening creature, but only has twenty HP and one attack. The Star Kids posed like Monstar in order to defend their home while Bowser has the Star Rod. "Monstar" fights Mario, but when Mario defeats it, the Star Kids appear. They realize that Mario is a good guy and then lets he and his partners pass on to Starborn Valley.