Don't let naysayers convince you otherwise, San José, Costa Rica can be a great base for exploring the rest of the country, especially when visiting with the whole family. Nowhere else will you find as many street festivals, free outdoor activities and kid-friendly restaurants as in and around the capital city. 
Fun with the family — Photo courtesy of anja_johnson
First, choose a hotel to suit your needs, such as the Costa Rica Mariott Hotel, which is luxurious without being pretentious and is happy to host the whole tribe. Two outdoor pools, that will keep the kiddies entertained, and an onsite spa for parents are among the amenities, but it's the staff's hospitality that might just save the day. They are ready to suggest and arrange day trips and excursions to nearby sites, such as the enchanting Butterfly Garden and the active Arenal Volcano. 
Family time in Costa Rica — Photo courtesy of youwhocolleen
There is always a festival being celebrated somewhere in Costa Rica, and chances are you'll be in town for at least one of them - inquire at your hotel or ask a local. The Bonanza Cattle Show is a winner with kids, and will bring out the cowboy in just about everyone.
A visit to the La Paz Waterfall is an easy excursion from the city, and offers an up-close experience with not just one but five rushing waterfalls, exotic birds, monkeys, sloths and snakes in the serpentarium. 
Friendly baby Boa Constrictor — Photo courtesy of Sophia LaMonica
In the middle of San José lies the big green La Sabana Park, former site of the city's airport, now a great (and free!) place to hang out with family, kick around a soccer ball or even paddle around the big lake at its center.
A few minutes outside the city limits, there is an all-natural amusement park, INBIO Parque, that is a must-do for all ages. Spend a half-day at least exploring the educational and entertaining exhibits, and you'll be able to better appreciate Costa Rica with the newfound knowledge.
If it rains on your parade, which it's been known to do in Costa Rica, the Children's Museum is a nice way to while away a few hours for kids and adults. Just make sure to keep track of your little ones; the maze of exhibits is extensive and it can be easy to get lost.
However you decide to spend your family vacation in Costa Rica, just remember that you're in the land of "la pura vida," so relax, be patient, and enjoy this quality time with your loved ones.