Cuba is an excellent destination for families, particularly if you want an all-inclusive beach vacation with a broad range of tours, activities, and entertainment options. Toward this end, Varadero would probably be your top choice, with a wealth of watersports activities and land-based adventures, including nearby caves to explore. The beach destinations of Cayo Coco, Cayo Guillermo, and Guardalavaca are also worth considering. If you do go the all-inclusive route, be sure the resort you choose has a well-run children's program, with a full plate of activities.
If your children are old enough, they should enjoy the colonial wonders of Habana Vieja (Old Havana), including its forts and castles. Hotels and attractions throughout Cuba often give discounts for children under 12 years old (and sometimes teens up to 16 or so often get away with admission at children's prices).
However, hotels offering regular, dependable babysitting service are few and far between. If you will need babysitting, make sure your hotel offers it before you leave home.