I grew up in the DC area and although I’m not keen to live there, there’s quite a lot to like.
The National Portrait Gallery/National Museum of American art is, sadly, closed until 2004/05 while they renovate their shared home - a jewel of a buidling that once was the patent office. Save it for when the kids are older.
I am a big fan of the National Museum of African art, which is something the kids might like, too. It’s housed underground in the courtyard of the Smithsonian Castle. They’ve done a marvelous job of curating the whole museum in a very appealing way.
Much of the Natural History Museum is, I’m afraid to say, in even worse shape than the American History Museum next door. But one fantastic exception is the geology exhibit, which includes the Hope Diamond (beautiful, but rather smaller than I thought) and merits seeing for the rest of the collection - one of the world’s greatest.
For American culture, I recommend a visit to the National Archives, which is just north of the Mall. Even for someone as cynical as I am, there is something deeply moving about seeing the Declaration, the Constitution and the Bill of Rights. And it’s Right and Proper to have the young’uns view them - to know that many people fought and died for these three documents, which have been the light of the world.
Argh! I just went to the website to see if they’re open on New Years, only to find that they’re closed until 2003 as they re-encase the Founding Documents. (There’s a nifty description of the process here. I’d forgotten that there was quite a to-do - the old cases had lasted 50 years, their expected lifetimes, so it was time.)
The Holocaust Memorial Museum is another great visit, albeit heavy. They do have a fairly effective exhibit for children. It may be something to do on a later trip, or for the grownups to do.
In all my years living near DC I never went to the White House. From all reports I’ve heard it’s not all that interesting - and the crowds are enormous, the lines long, and the security tighter than ever. Instead, I’d visit the Capitol, where the crowds are lighter, especially over the holidays, and the guides are engaging.
You might also visit the Jefferson Building of the Library of Congress, which is just behind the Capitol (meaning to the east - I always think of the Mall side as the “front”). It’s a gorgeous beaux-arts pile, marvelous when you think that anyone - anyone! - can walk in and use it. There’s no better symbol of American democracy than that.
If the weather’s really cold the U.S. Botanic Garden offers relief. It’s on the Mall side of the Capitol.
December’s actually not a bad time for DC. You’ve a decent chance of bright, chilly weather, which I find perfectly fine for touristing in.
One thing to note: distances around the Mall are rather long, and other than (overpriced, underflavored) Smithsonian cafeterias, there’s not much to eat. Pack snacks and drinks.