Here is the official explanation of this question From Verbal question bank for GMAT Winners (SC):
A glance through the choices indicates there may be a problem with the preposition following “compare.” The word “compare” should be followed by “to” when used to compare things in the metaphorical or poetic sense. It should be followed by “with” when used in the literal sense. You compare “Juli with Jill” and “her test scores with his test scores.” But you compare Jill’s temper to a storm. In the given sentence, the author is making a literal comparison between children of older fathers and children of younger fathers. So, options (A), (B), (D), and (E), can be eliminated for that reason alone. The answer, therefore, is (C).
FRANKLY SPEAKING I do not like this explanation because it does not give a true lecsicological difference between "compare with" and "compare to". As in the Official GMAT Guide editions it may be explained in a better way: "compare with" is to be used when two different things or features have to be compared, whereas "compare to" when two similar things or features have to be compared.