St Kilda Rd is a main street out of the city... and has lots of offices. It would be handy as there are many trams that run along St kilda Road... It's not a 'bad' area. It is only 5 minutes out of the city.
If you were to stay on St Kilda Rd... I would recommend you go to Southland shopping centre as you could catch a tram as far as you can go... then a bus.
The other huge centre is Chadstone. (I think it is (or was) the biggest shopping centre in the southern hemisphere) From the city you could catch a train and go to Hughsdale station and either catch a bus.. or a 15 minute walk to the shopping centre. There would also be lots of buses to Chaddy (from various locations)... but I'm not a big public transport user.
Because Melbourne is so big... it is broken up into zones. I know they recently dropped one of the zones... so it may be just two zones now. You would only need a zone 1 ticket as that goes out a fair way. I'm not sure about kids... but I would guess you would have to pay child fare for both of them... but don't quote me on that
Areas outside of the CBD that you could stay are: St Kilda (can be a bit dodgy... but very close to the beach & great entertainment area). South Yarra/Prahran (an expensive area), South Melbourne, Caulfield, Balaclava...


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