Have done a number of European trips with lots of kids.
Portugal is a great country to spend 1-2 weeks in. Lisbon is a fun city, but like Italy you can see very different regions in a small area. Sintra is one of the favorite places I've been to in any country.
If you haven't been to England, also offers a great mix of experiences. London is probably my favorite big city, and then you have lots of other places to dip into.
Highly recommend Budapest and Vienna as well.