Zermatt or Interlaken

I'm not so sure I'd get hung up on the Lanterbrunnen Valley route.

Since you mentioned Zermatt, if you take the eastern fork on the mountain railway, you can pause in Grindlewald which is a pretty nice, but touristy village, if you're headed all the way to the joch (expensive). The other advantage is that, if you walk to the eastern edge of Grindlewald, you can ride the gondola to First. The view of the north face of the Eiger in the late afternoon will knock your socks off.

Zermatt is a pain in the neck to get to and there ain't much to do except look at that one hill when you arrive -- or walk up and down the street memorizing the junk in the stores.

Interlaken is interesting in itself and offers several options to get up into the mountains.

I would choose neither of these options. Yes, head for Interlaken but when you arrive change trains at Interlaken Ost and keep going until you arrive in the Lauterbrunnen Valley (about 20 minutes). This is where you want to be to explore the Alps. From Lauterbrunnen you have stunning views all around plus easy access to Mürren/Schilthorn and Wengen/Jungfrau.

I also agree with Tim. I did visit Zermatt and really liked it( the Matterhorn does not disappoint ) but arrived there from Florence so it was not a pain to get there. Did not care for Interlaken or Grindenwald--touristy and not especially charming. From Geneva take the train to Interlaken and change to train to Lauterbrunnen and from there go to Wengen or Murren for real Swiss scenery. Lots of hiking options there. IMO it is one of the most beautiful places in the world.

I used to live in Switzerland and I'd go to Interlaken in a heartbeat over Zermatt. Bear in mind that like most of Switzerland, the cities are nothing, its the land thats incredible. I'd head immediately to Lauterbrunnen, walk down the valley a bit and then take the train up to Kleine Scheidegg. From there you get an amazing view (the train ride up there is pretty incredible as well). In the afternoon, ride over the other way towards Grindlewald and then back to Interlaken. If you have multiple days, head up to First and then up to the Faulhorn. Its a decent hike (about two hours) but the view from up there is amazing. If you want more information please send me a private message.

Thanks for the info everyone. We've decided to go to Lauterbrunnen and then on to Murren and Gimmelwald. We have one person in the group who has moderate acrophobia so getting her on a cable car up to the Jungfrau would be very hard on her.

Skip Zermatt!! Not that scenic and very touristy. In Interlaken change trains and go on to Wengen or Murren which are absolutely beautiful.

It's a train, not a cable car, that goes up to the Jungfraujoch.

If someone in your party has acrophobia, it is Muerren and Gimmelwald you'll want to skip[INVALID]-you can't get to either one without riding a cablecar (unless you want to walk up). Wengen, Kleine Scheidegg and the Jungfraujoch, on the other hand, are all reached by train.