The City of 100 Spires was our favorite! The architecture and character of the city center are fantastic. Souvenir shops and restaurants abound, but there's a cultural artifact or historic building nearly everywhere you look.
Prague is also a very walkable city, even for youngsters. All of the major sights are within a 1.5-mile radius. Prague Castle does require a bit of an uphill hike, but most anyone in fair health can make it to the top.
Each major attraction has vending machines that dispense medals and coins embossed with the attraction's image. They're $3-5, depending on the exchange rate, but they're fun to collect and make neat souvenirs. They might motivate reluctant sightseers, too.
As for other souvenirs, I bought a gorgeous hand-tipped etching (art print) from a vendor on Charles Bridge and found lovely traditional Slavonic handicrafts (think Christmas ornaments) at Violart, a shop just outside the Jewish Cemetery. There's no shortage of shops selling garnets, Czech glass and Matryoshka dolls, but only garnet jewelry is reasonably priced.
Our hotel, King's Court Hotel, was perfectly situated. Powder Tower could be viewed from our hotel room, the Palladium Shopping Center was across the street, and the Old Town Square was only a 5-minute walk away. The facilities, service, and breakfast were top-notch. We highly recommend it.
We utilized AAA taxi service to get to/from the airport/hotel. They're punctual and fair-priced ($25 to the city center), and they advertise a 46% discount on return fares. Just be sure to get a receipt for the return trip, because you may have to collect a refund at the airport.