I love Traverse City. It is beautiful, fun and has something for everyone. For the younger members of your group there is the Great Lakes Children's Museum. When we went my son had just turned two and he had a blast!
It has a water and boating theme (appropriate enough). There is an area for coloring, a very cool climbing/sliding explanation of the water cycle and the most incredible virtual stream that reacts as people walk through it. The best part, though, is the huge, interactive water table that dominates the center area.
Kids are able to see how the flow of water changes as they add or remove the plastic panels. A large collection of floating toys helps drive the lesson home. As a bonus, adults seem to love the table as much (maybe more) than the kids. My husband played at the table for much of our visit!
There is a small toddler area full of fish pillows, books and a small, soft slide.
There is also a game that helps illustrate how pollution affects us and the water around us. It was a little advanced for my little guy, but the older kids really seemed to be enjoying it.
At just $6 a person for an all-day admission (under 2 are free), the museum is a great bargain for a little fun for the kids. Visit the museum website for more information on hours and events.