For a family I would recommend the Sofitel. It has a huge pool area, large buffet breakfast which is free to guests, and a short walk to some interesting areas. I was there with a family of 7 and we negotiated a rate of €425 for the Presidential Suite. But obviously two normal rooms would be cheaper, depending on the season.

Driving around is a great idea as it is an amazing country. Mountains, beaches, desert, etc. It's a lot like California in its terrain.