We visit Montreal two or three times a year, usually travelling by train, so we stay at the Fairmont Le Reine Elizabeth Hotel, which is attached to the train station and the subway (the 'metro'). There are a number of other very good "chain" hotels downtown, including a Sofitel, a Loews and the Ritz-Carleton--all of these can be fairly expensive. There are also some boutique hotels in the historic area of town, both the Hotel le St-James and the Hotel Nelligan have had very good press. The best restaurant is reputedly Toque, which is rather expensive--and reservations are required. A fun place to go, for a lot less money is Le Bourlingueur, in the old part of the city. Also in the old city is Bonaparte, a traditional French restaurant, which is quite good. If you are a smoked meat fan, Montreal smoked meat has a huge following, the best is available at Chez Schwartz Charcuterie Hebraique de Montreal, which is a small restaurant that also does a booming take out business. Montreal bagels also have a terrific reputation, the two best sources are at St. Viateur Bagel & Cafe and the Fairmont Bagel (which has nothing to do with the hotel chain). You can get a delicious inexpensive breakfast or lunch at St. Viateur. Very good dim sum is available at Maison Kam Fung, but be aware that there are huge lineups to get in on Sat. and Sun., and expect a wait to get in, particularly for parties of 4 or more.
I am not too sure about kid friendly activities in Montreal, but I do understand that the Biodome and the Jardin Botanique and Insectarium are appealing to children.