Yes, a 2 bedroom sleeps 8. If you reserve a dedicated 2 bedroom unit, the second bedroom will have two queen beds in the second bedroom. If you reserve a lock off, the second bedroom has 1 queen bed and a sleep sofa in the second bedroom (not sure if the sofa in thebedroom is a double or a queen). In both cases, the Master bedroom has a king bed and a queen sleep sofa in the living room.
If you have enough points, resere both the 1 bedroom and the 2 bedroom. Cancel whatever you don't need when your family makes up its mind.
You may or may not be able to change to a 1 bedroom from a 2 bedroom later - depends on availability. There have been a few posters who reported that MS let them keep one side or another from a lock off 2 bedroom, but you can't really count on that.
Sorry your family can't commit now. It's the worst part of trying to plan a trip (IMHO).