I'm on a four year overseas assignment myself. No kids, but for most expats the standard of living overseas on an expat package is much better than their job would normally pay at home, so make sure a great remuneration package is put together, and I hear international/american school overseas are very good (and have fees to match). Don't settle for your US salary.
PP who noted the exchange issue, this is very important, you may wish to consider asking for a salary split to lessen the pain when movements in either direction occur. Also, the strength of the Euro should be considered when negotiating the salary.
Ask for a look-see trip first to introduce the family to the city and look around for accomodation ahead of the real arrival date without the immediate pressure of needing to find somewhere just to get out of a hotel. Also, home help in Germany will be much more expensive than in many other countries, so if you're expecting house staff (housekeeper, nanny or driver) don't underestimate this cost.
There are as noted a heap of hidden costs. Selling your car and buying a new one, differences in insurance rates on everything including comprehensive health insurance and
travel insurance for each time you leave Germany (which will be frequent since it's Europe and everywhere is a stone hrow away, great for weekend trips), re-furnishing appliances or even just having to buy a large number of adaptors and transformers, moving pets can be very complicated and expensive if you have any.
Germany should be a relatively easy country to move to - first world modern country without a particularly serious crime problem, great infrastructure and well serviced by international flights (Frankfurt is the Lufthansa hub city), plenty of culture and things to do, and super easy to escape to other fantastic countries for holidays when it gets too much. There will be a language barrier that will make things very frustrating at times, but english is widely spoken and german is one of the easier languages to learn, your children will pick it up very quickly. I have enjoyed travelling to Germany a couple of times.
Also...Oktoberfest
In summary, go for it, and make sure they pay you what you're worth, and discuss possible future options to extend in case you guys love it - if the project will be ongoing, it's a cost saving for them to keep you there rather than moving someone else over to replace you.
maddmike - you Americans can always move to New Zealand, we love you guys (and single gals all swoon at the accent

) I think our Prime Minister mentioned how much we like you guys when he appeared on the Letterman show recently.
http://www.youtube.com/watch?v=6b3VzcK2xqM