I prefer the old harbour area in PDC, as opposed to the new town, lots of restaurants and enough bars to keep you happy.
If you hire a car Lanzarote is very easy to explore with very good roads.
I would recommend an apartment (with two families you can have separate apartments) because villa's tend to be quite expensive, have a look at the reviews.
You are asking about going in Feb/Mar, everywhere is open with March being a bit busier especially around St. Patricks Day.

thanks so much for your advice

we have travelled together before and found villa's are best for us, worth the extra as we all muck in with the kids and really want a private pool. Plus as we can't really dine out in the evenings we socialise in the garden with a bbq whilst still being close to our sleeping children. Otherwise we'd be twiddling our thumbs at night.

Plus babysitting for eachother is easier ect ect.

i love the sound of old town as i have never been fond of new developments and if there are plenty of restaurants nearby then fab!!

a drive to the beach is actually easier for us as we have to lug so much gear about with us, we can chuck it all in thre cars afterwards and got for a bite before putting the children to bed.

we are getting close to making a decision and your input is much appreciated thanks !!