My DH & I spent 3 weeks in Tasmania for our honeymoon & loved it. The places we stayed at probably wouldn't be suitable for extended family, they were more B&Bs. But there are heaps of self contained cottages if there are going to be lots of you going.
As for things to do there is heaps!! Some of my favs were:
West Coast Wilderness Railway & Gordon River Cruise both in Strahan
East Coast nature World in Bicheno. You get to hand feed animals, so cute!!
Port Arthur, go on the Ghost Tour at night if you're feeling brave
Cascade Brewery in Hobart. You get 3 free drinks after the tour!!
Cataract Gorge in Launceston
The Tahune Air Walk. There is also a Jet Boat on the way to this that is pretty cool, they take heaps of pictures & you can buy them on CD
Mole Creek Caves. Near this is Trowunna Wildlife Park where you get to pat koalas & Tassie devils & hold a baby wombat!!

I went on one of the tourism websites & requested information - one of the things they sent was a book full of the accomodation, prices included which was really helpful when deciding where to stay. There are 3 different "seasons" for tourism: peak, shoulder & off peak. We went in March which is classified as the shoulder season so it was abit cheaper. Plus the weather was pretty nice, had mainly sunny days.