Leipzig or Erfurt?

The main attraction for kids in Leipzig would be the zoo, which in my opinion, is the best in Germany. Leipzig is a bigger city, but for a tourist, the main areas of the city you would likely visit are more compact. You may not find many beer gardens in either city, but both have plenty of restaurants with outdoor seating. Leipzig's Barfussgasse (Barefoot alley) is lined with several such restaurants, and it's a great people watching zone. The square around the cathedrals in Erfurt probably provides a similar atmosphere.

I guess the choice comes down to what kind of city you want to stay in. Both cities have a mixture of pre-modern, 19th century and communist era buildings, but Leipzig feels more rooted in the opulent days of the late 19th-early 20th century, whereas Erfurt has an older atmosphere about it.

I spent a few days in Erfurt twice and loved it, but since this will a big Luther celebration year, hotels might be both expensive and scarce during this summer. Therefore, I recommend using Leipzig as a base for your visit to both cities. I have been to Leipzig four different times (the first visit in the early spring of 1990) and have found plenty to do and see there on each occasion, I typically do not recommend restaurants because people's tastes vary so dramatically, but I do suggest you try Auerbachs Keller in Leipzig for a lunch or dinner. The food and service there are both very good and the experience of dining in the place where Goethe located one of the major scenes from Faust is quite enjoyable. Also the St. Thomas Church (for Bach and the St. Thomas Boys Choir) and Nicolai Church (home of the Monday night candle light vigils/marches) are well worth at least a short visit.

Well, the kids are going to be going to Buchenwald and the Wartburg whether they want to or not, aren't they? I agree that there's lots to do in Leipzig, and little for them to do in Erfurt. But they probably won't find the Thomaskirche and Bach Museum that interesting. There is a respectable amount to do in Weimar, and it's much closer to your other targets than is Leipzig. It probably has more housing choices than Erfurt. You didn't mention Dresden, which has the Green Vaults and Military Museum that the kids might enjoy, as well as a more interesting city (with boat rides) than Leipzig.

We slept three nights in Leipzig and three nights in Weimar. Don't overlook the EGApark in Erfurt. A good thing about Weimar was getting the car out of town each morning. (We deliberately picked a modern business hotel with an underground garage next to it.) We didn't pick up the car until we left Leipzig. We drove as far as Quedlinburg from Weimar, which was quite a drive, but it was on my must-see list.

If either kid is a scientist, I was sorry to miss the Zeiss museum in Jena.

Edit: Would they like the UNESCO WHS Dessau-Worlitz?

Since you mentioned seeking a funky hotel: You may well need air conditioning in this area in the summer, so book a hotel that has it. If the room can be canceled and you see cool weather in the forecast, maybe you can find funk without air conditioning at that point.

I enjoyed Erfurt a lot. The Merchants' Bridge is very interesting, aside from everything else in the historic district. I like university towns; there are usually interesting, inexpensive restaurants.

My stay in Dresden was marred by the total failure of the air conditioning in my not-cheap hotel. For 4 days. But the Historic Green Vault was one of my favorite sights on that trip, and there is, indeed, some impressive armor (as well as other things) in a different museum in that complex. Just understand that the reconstructed (medieval-looking) part of Dresden is quite small. The historic area is a long enough walk from the train station that I'd take a tram if on a day trip. There's a tourist office either in or just outside the train station. The staff can tell you where to get the tram to the museum area.

I don't know of any places to stay in Erfurt or Leipzig but do know them in Weimar. There is a Pension ca 4-5 mins walking down from the train station, about the same distance as the HI hostel in Weimar.

I was in both Leipzig & Erfurt last September. You can't go wrong in either place. I enjoyed Erfurt a little more, less busy. My hotel in Erfurt was not air-conditioned. Although it was mid-September, it was uncomfortably warm at night. Part of the reason was the hotel faced west & got full sun.

The youth hostels in both Erfurt and Eisenach have a number of 4-bed rooms, but no AC.

On my two visits to Erfurt I stayed at the Excelsior Hotel (Best Western Plus) which is perhaps a five minute walk from the train station on Bahnhof Strasse. Their rooms are good sized and comfortable and their breakfast is excellent. When I was there last they had a very good restaurant on the premises.