Bellagio on Lake Como would give your wife and kids a more interesting time. They will have an easy time exploring --lot's of little towns, castles and such to hike up to... It is a very large lake but a very contained area (can't get lost) that has little ferrys to take all from (walkable) town to town. The lake even has an island.
Staying in Venice is nasty, IMO. ...but at least it's very expensive. Rome, is a long ways from Monaco; Florence is closer. Anyplace along the coast north would be closer. The five towns north of LaSpezia are quaint with cool cliff-side trails between them - if you like hiking.