dont stay at the Big Sleep with a family! Its gaytown and the little ones might ask too many questions, it can be quite noisy there too as there is a gay bar right next door.
Unfortunately they are knocking down a lot of town nearby The Big Sleep/Jurys etc so its a bit of a building zone, but will be fab in 2 years with John Lewis etc.
Town would be a great place to stay because there is so much to do, its safe in the evenings etc and you will have the best access to public transport (or are you bringing a car?)
Have a look at Tipadvisor for reviews of hotels:
hotel reviews
They're always useful. I'll see what I can find out for you about cottages etc.
The only thing to bear in mind is that the Cardiff half term is a week after the English one so there wont be that many special activities on, but it also means that things are cheaper and quieter!
All the ideas that people have suggested are a great idea. You can group them together in days:
- Cardiff Bay Day, Techniquest,
techniquest
lunch somewhere in Mermaid Quay (Nandos, family friendly bars, American, spanish, Indian, Chinese etc oh and a Cadwaladers Ice Cream yum)
mermaid quay
or lunch at Atlantic Wharf (chinese buffet, Old Orleans, Mamma Amalfai etc). There is also a cinema and a bowling alley at Atlantic Wharf (10 mins walk from Techniquest which is at Mermaid Quay) oh and the free Dr. Who exhibition at Atlantic Wharf. If the road train is running (weather permitting) have a little tour of the bay and end up at the Cardiff Bay Barage which has the sunken pirate ship play area that Californifrau was talking about.
- Town Day. Cardiff Castle,
cardiff castle
National Museum of Wales (fab dinosaur, volcano, earthquake type exhibits and an art gallery upstairs with lots of Monet and Rodin with art carts to keep kids busy)
museums
Also 2 cinemas in town and lots of goods shops!
Other things to include if you have a car:
Castell Coch,a fab fairy tale type castle not far from Jn32 of M4
Museum of Welsh Life, St. Fagans, free outdoor museum and activities like pottery, and play areas.