The 1st is generally a fine location for 1st-timers; we've stayed there. If you'll be located near Jardins du Palais Royal, then you'd be close to Jardin des Tuileries and the Louvre, and easy walking distance for any number of other attractions. It does tend to be a more expensive location than others of the close-in arrondissements.
As far as "quaint" neighborhoods, pretty much all of historic, central Paris falls into that category, as the definition goes. LOL, I have a personal issue with the term as it smacks a bit of tourist-described "cuteness" but I'll cheerfully chew a lip and let it go. HA! Your children may also be able to tolerate just so much "quaint" neighborhood ambling before needing something a bit more to their preferences. The "obvious things" in Paris? Which of those do you have on your list?
Montmartre is OK as long as you know what it is you want to see, and understand that parts of it are crowded tourist magnets. We loved our wander through Cimetière de Montmartre as it was blissfully free of the mob plus is the resting place of any number of notables such as Vaslav Nijinsky, Alexander Dumas, Edgar Degas and Hector Berlioz. I took my saxophonist husband there to see the tomb of the inventor of his instrument: Adolphe Sax. Young folks can find Parisian cemeteries to be fascinating crawls through spooky, crumbling mausoleums and evocative sculpture.
You don't need the Metro to visit the Marais from the 1st as it's not that far away. We also walked to Montmartre from the 1st - and enjoyed the journey - but will admit that it's probably a longer trek than most visitors want to do on foot. Depending on your must-see list, you might not need the Metro much at all; Paris is such a wonderful city to explore from the sidewalks!