I've done a few places at Durango.
Holiday Inn - close to the yards and the tracks, if you want to get a little 'railfanning' in. Nice rooms, clean and within walking distance to pretty much everything in downtown.
Iron Horse Inn - this is out North of town a little bit. Another place if you want to watch the trains go by. They have quite a few different room types (have some lofts which might be good with the family being along). If you do stay here, request a room on the track side of the hotel. It may be a little more expensive (maybe $10 if I remember right)....but I thought that it was worth it.
I'm thinking next time I go I want to try one of the other hotels near downtown (can't remember the one just south of the Holiday Inn, but it looked very nice).
Hope this helps.
Craig
Somewhere up in NoCo