You've gotten some good replies on this helpful thread. Varied opinions, but good info.
My 2 cents...I live in the Bay Area and travel into The City for weekends of fun. I have stayed at all the properties mentioned, save for the very nice Stanford Ct. As in previos posts, I always recommend the REN Parc55. They often have special offers at http://parc55hotel.com/. Kid friendly-not any less than the convention heavy SF Marriott. Parc 55 is 2 blks from Union Sq and equal distance to cable car and also trolley out to Embarcadero and The Warf.
I never recommend the Marriott, known as one of The City's great eyesores. It is a mamoth hotel. Often MEB rates make the property more desireable. If w/car, parking at the very nearby Mission/4th garage is always the smartest bet.
I agree with other FTers re warf properties. The location from the H2O is great, but SF is a compact city, getting around is easy.
I have stayed at the CY nearest SBC Park (2nd St) and found it better than the dtown M. The hotel is a new highrise, 5 blocks from the ballpark-which is a don't miss. Bleacher seats are always in the sun-if there is any sun in June! CY rates can be $99 AAA, $91 through an offered MEB, or even packages if through the front desk (I got room and parking and breakfast for $109).
The Oyster Pt locations, though accessable, are 15 mi from The City...and that's not so much fun for kiddies.
Metreon is a good distraction for kids and is not far from any of the hotels discussed except for the warf's M and CY.
You might want to look at http://www.sfcvb.org/ for ideas and discounts on ferry/cablecar/museum packages.