Don't stay in Interlaken, which is near but not in the Alps. Stay in the Alps, either in the valley (Lauterbrunnen), up one side (Wengen) or up the other side (Gimmelwald or - my preference - Mürren). Four nights in Mürren is what I did, and it worked very well. You can never predict mountain weather, and being right there allows you to change plans on the fly when the clouds come in or leave.
For passes, be aware that there are multiple options, and crunching the numbers to figure out the "best" one can be difficult. One thing that can't miss is the Half Fare Card. You get half off everything that moves in all of Switzerland, including the very expensive Jungfraujoch excursion, which is only 25% off with most other passes. The Half Fare Card costs 120 CHF, so if the total of your definite rides is 240 CHF or more, you can't lose.
However, with a Half Fare Card, you have to buy tickets every time. With a Swiss Pass or a Berner Oberland Pass, you only have to buy tickets for items not fully covered (Jungfraujoch, Schilthornbahn). For other rides that are fully covered, you just flash your pass.
I don't know the latest on children's prices, but they should travel either free or very cheaply with an add-on to the adult passes.
