Minor children are automatically naturalized when their parents become citizens
US Citizenship and Immigration Services
http://www.uscis.gov/tools/glossary/derivative-citizenship
Derivative Citizenship
Citizenship conveyed to children through the naturalization of parents or, under certain circumstances, to foreign-born children adopted by U.S. citizen parents, provided certain conditions are met.
Minor children did not used to become naturalized as you say when their parents became citizens.
High school friend had parents from Argentina who became citizens. He applied to have his status changed as a minor which is much easier compared to applying as an adult.