If you decide to go to Hamleys, and it can be great fun for kids, go early morning as soon to opening as you can. The first hour or so of the day is much more pleasant in there and there's room to properly look around.
Avoid Winter Wonderland in Hyde park, it's crammed full, and really not worth the expense.
There are a few markets, the main ones happening around Trafalgar square, Leicester Square and on the South Bank. They can be nice for a little look, but get very busy. For food treats you would be better going a little further up river and visiting borough market.
There are some really nicely designed Christmas themed afternoon teas, if the children would like that type of thing. They can be pricey though.
The big department stores will all have their window displays up late November and there are normally some pretty amazing displays.
For the lights, don't bother with the specific bus tours. Jump on some of the normal
Double deckers, you get great views of the lights, and several routes will go through multiple of the main light locations.
The Museum of the Home is a nice Christmas visit. They decorate the various rooms in the Christmas style of that particular time period.