"...suggestions for river cruises and hotels/hostels/pensions that would be cost effective for a family of 5."
Rhine: St. Goar is a very good base town for the Rhine - sandwiched in between Bacharach, Oberwesel and Boppard, 3 very desirable old-world destinations, St. Goar shares the west bank Koblenz-Mainz train line with these and other towns. There are no bridges between Koblenz and Mainz, but St. Goar has a ferry for crossing the river - and there's a train station on the opposite bank, serving the east-bank line, so the east-bank towns (Braubach, home of Marksburg Castle, and Ruedesheim) are accessible.
Ferry: http://www.schiffbilder.de/1024/personen-fahrzeugfaehre-loreley-vi-zwischen-18381.jpg
Map: http://welterbe-mittelrheintal.de/fileadmin/images/themen/region/uebersichtskarte/mrt_karte.gif
Accomomodations: A few years ago we stayed at the Loreley Apartments in the Rhineview unit, a 2-bedroom set-up for 5 persons on the top-most floor. The living room window looks over a scene much like the one in the photo link above. Great place to stay, just a few steps from the boat docks and the train station.
Cruise: Take the train south to Bingen and cruise back north to St. Goar. This covers the most scenic part of the river in 1.5 hours. KD Cruises in Bingen offers a discount to train users (just show your train ticket at the kiosk when you buy your tickets - no pre-purchase of cruise tickets is needed.) Bingen-Rüdesheimer also offers cruises through the same sector.
Local train pass for day trips: The VRM mini-group ticket is a day pass for 5 people; cost is €22.10/day and covers the VRM region from Oberwesel north along the Rhine to Remagen, and up the Mosel to Cochem (and a little further.) The Rheinland-Pfalz ticket may be useful too - it covers the VRM and a much larger area outside the VRM as well. Both passes cover the St. Goar ferry too. You can buy both from ticket machines at the station in St. Goar. The Rheinland-Pfalz ticket can be bought anywhere in Germany from any ticket machine, the VRM ticket only within the VRM coverage area from ticket machines in the local train stations. Read about both here:
http://www.vrminfo.de/en/tickets-and-fares/ticket-offers/leisure-ticket/