Utrecht is an amazing place, whatever you do you'll have a great time!
+1 for sitting in a cafe and watching all the people go by! If your kids are a bit young for this maybe you could combine it with a stop for a bite to eat. We used to go to Parkcafe Buiten next to Wilhelminapark after work which is on the main commuting route between the city and the university, it gets the sun all day and you can watch all the beautiful people going by.
The Dutch are very into pancake houses, which are also great places to go with kids. We used to go out to Theehuis Rhijnauwen, which is a very nice cycle along the old course of the Rhine (This branch of the Rhine silted up and is now very small). You also pass one of the bigger places for renting canoes on the way, although you'll need strong arms if you intend to canoe all the way to town from there.
For interesting longer tours, the west of Utrecht is entirely flat (since it is below sea level), and to my mind less interesting to cycle, although I once went on quite a nice ride to Oudewater (famous for weighing people accused of being witches and finding them to have a normal weight and therefore be innocent). To the east there is a line of hills (the Utrechtse Heuvelrug) with some nice changing scenery including lots of sand dunes. There is a funny mud pyramid in the middle which Napolean made his troops build in order to keep them out of trouble, it's not particularly impressive but it's fun and we used to make it a focal point when we cycled out that way.
To the north there is a huge lake (Loosdrechtse Plassen, just to the east of Breukelyn - a nice little Dutch town, the original brooklyn). This can be a nice day out cycling.
In town, the museums are quite pricey but we liked them. The Speelklok museum is bizarre but quite fun, it's a museum of automated musical instruments, lots of barrel organs and things. There are always loads of kids there. I'd wait until an English language tour.
The city centre is generally just a great place to wander around. You can get food on the wharves of the central canal through town, nice on a sunny day. If you arrive at the central station and walk in to town you will pass a canal which is being re dug. If you look on google maps you'll see a circular defensive canal around town which only goes three quarters of the way around, since part was paved over in the seventies to build a dual carriageway. This decision has been reversed and they're now re digging the canal!