I love Colorado! One of my favorite places to go is the southwestern area around Durango. Auntpolly mentioned Mesa Verde National Park, and I agree, it is amazing. It is one of the most incredible places you can visit. Definately worth at least one entire day. Also, the mountains in the area are beautiful. We took a jeep tour out of a little town called Ouray, up through the off-road areas and LOVED it.
In Colorado Springs, don't miss the Garden of the Gods. It is amazing! Ever since my first visit there as a child, it has been one my goals to learn to rock climb and go there to do so. (I'm still waiting on that one!) It is also a lot of fun to tour the Air Force Academy.
In Denver, you can visit the US mint. I haven't been in years, but it was really cool. I liked it as a kids, so I'm sure the kids in your group would too. The Museum of Natural History is great too. It has some realyl good displays.
If you are around Denver, don't miss Rocky Mountain National Park. The drive through it is amazing, and there is some great hiking in the area. For the truly adventurous, you can hike/climb (no technical = no ropes, etc) to the top of Long's Peak over 14,000 ft high. Not a good idea for the little ones from what I've read and very strenuous. (Also on my to do list.)
I would absolutely drive! Its not a terribly long drive, and so much of it is gorgeous. We almost always drive, because we feel you miss entirely too much if you fly. We live on I-45 about 1 hr south of Dallas and we drove through to Colorado Springs in one day. It seems like it is around 13 hours. When we went to Mesa Verde National Park, we left after lunch and stopped in Amarillo for the night. We saw Palo Duro Canyon (lots of fun too) in the morning and then drove through to Farmington, NM. We could have gone further, but we went ahead and stopped there.
If you have any questions, feel free to PM and I'll help as much as I can. I've never lived there, but I've been many times, and I love to research trips. (We just got back from a trip to the Buffalo National River in AR. All I knew when we first thought about it was that it was good for canoeing. By the time we went, we had stuff to do for our entire 5 day trip and more. It's amazing what you can learn online!)