Finally figured out my husband is cheating. Don't know what to do

I found my way here through a google search on trying to figure out why people cheat. I'm hoping someone here can give me some advice and give me some hope that my marriage can be salvaged. I've been married for 8 years. Me and my husband have 2 daughters together (ages 7 and 3). We have separated in the past but it was over money problems and sexual differences. We have never had any problems of infidelity and though I am a flirt myself, I've never cheated on my husband. My problem started last week when my daughter was begging me to find her leap pad. I checked both of our vehicles including my husbands. In the back of his car, I found a bag from Victoria's Secret. I was curious so I decided to take a peep inside. It was a nice lingerie set. I didn't bother to fully take it out or check the size because I assumed it was for me on Christmas. Honestly, it made me feel good to see it because it has been months since he bought me something like this. We've been so busy leading up to Christmas that I never really thought back about it. I hadn't thought back on it until Christmas, when all of the gifts had been opened and none of them were the lingerie set.
My parents are in town and they've been with us since the 23rd. I assumed that maybe he didn't want to give it to me in front of everyone since he thought I may have been embarrassed. So Christmas night comes and still no lingerie set. By then, I'm still having a good time especially since my kids are happy and I'm spending quality time with my parents. Still, I couldn't get the thought out of my mind about the lingerie set. I ran through tons of scenarios on it. I tried to convince myself that he returned it but some part of me couldn't believe that. He doesn't know it but I've known his cell phone password for months. We both keep passwords on our phones since the 3 year gets on them and causes havoc if there is no code. I used to check his phone years ago but never recently. I had no reason to check it since I fully trust him. What I found troubled me and has left me in tears for the past day. There are text messages and picture messages from a woman I work with. She is a good friend of the family and knows my husband and children very well. What really tore me up was a picture of her wearing the lingerie that I saw in the back of the car. She sent him the picture on Christmas with a text about how she can't wait until he takes it off her in person. I've known this woman for 6 years and I would have considered her to be a close friend prior to this. I can't even to begin to describe how close our families are. To add more BS to the mix, she is engaged to be married to her 2nd husband.
So I've been holding this in for a couple days now and I don't know what to do. Right now, I hate both of them. I wanted to blow up as soon as I found everything but I don't want to spoil the holiday for my kids or parents. I haven't talked to anyone about this but I feel I need to confront my husband on this. I'm expecting him to deny this but I know what I saw. I return to work on the 3rd and I will see her then. I don't know how to begin to deal with this because I've been blindsided. I'm really leaning towards divorce but this is hard because I do still love my husband and my kids. I'm totally lost so on where to go from here but my gut tells me to just blow up. This has to be the worst thing I've ever had to face.

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