My kids are now 4, 6, and 8 years old, and this is our third season. As others have said, we're careful only to go out when the weather is good. Everyone enjoys it when it's sunny, and as their confidence grows, they are better in more wavey conditions.
We don't go very far, I would say a maximum of 1/2 hour pootle through the harbour followed by 45 minutes across the bay to some interesting place. Also, we put warm clothes and waterproofs on if there's any chance of spray, so no-one gets wet and cold.
For cruising you want a big RIB. For what we do, our smaller RIB is just perfect - we can land on beaches quite easily. We spent a long time thinking about the seating before going for a 4-5 man long jockey seat. Allows for close supervision, and the kids feel very safe. 2 years on, and we're still pleased with this layout. Kids can drive safely with an adult just behind, ready to take over if necessary.
I posted a couple of pictures ages ago, here
Orca, captain and first mate
Once the kids are older, I fancy a slightly bigger boat (5.85?) with individual seats, but they're not ready for that yet. The two younger ones regularly go to sleep; with different seating, I don't think we'd manage.