Bob,

Have you been to the Twisted Spoke?  I son't plan on taking the kids there but it looked interesting.

I second Bob's recommendation on the Museum of Science and Industry.  Is Dick's Last Resort still in operation on the Navy Pier?  I know it's a nationwide franchise, but I always had a lot of fun there.

Ray...you should see the sub exhibit now!

Second City is great, but not KF, unless you go to the Sunday kiddy show (I think they still have it).

Went to Chicago a couple of years ago for a long week-end.  Stayed at the House of Blues hotel (a Loews), it was very cool.  It's around the corner from Harry Caray's restaurant, where we had lunch one day. 

No has mentioned Gino's East yet?  Your kids'll love it...they can write on the walls!

Didn't do the Sears tower, but we did check out the Hancock building.

Craig wrote: ...What is the best way to get around town without a car? Where is a reasonable place to stay?  Nothing fancy...

I've stayed at the Day's Inn Gold Coast hotel on N. Clark Street a couple of times:

http://local.yahoo.com/results?fr=dd-local-more&stx=day+ s+inn+gold+coast&csz=Chicago%2C+IL

It's not the fanciest place, but it's in a good location at a nice part of the city, across from Lincoln Park. For the money, I think it's pretty good, though my friend was real impressed. I've stayed there twice.

As for transportation, the bus system takes you pretty much everywhere you'd want to go at a cheap price. It can get crowded, of course, depending on when you take it. Compared to the bus system in my town, it's a dream. You never have to wait long for a bus, and, as noted, you can get pretty much where you want to go, night and day.

Taxis are also always an option, but more expensive. 

Edited to add: A bit of trivia, the Gold Coast hotel was once the Chicago Hotel (I think that was the old name), and Al Capone stayed there once upon a time.