I would suggest that you have too many destinations.

14 days to see 5 countries is a bit too....ambitious.

Consider that first day you have jet lag, add in travel time versus touring time, add in time to orient yourselves in each destination...you will find more time gettign somewhere than 'being' somewhere.

If you want to expose your kids to the joy of train travel, sure. If you want them to remember the locations and not feel like they had to rush on to the next location/country...

Switzerland would not be on my list of low cost countries

I agree, that with two weeks, five countries is three or four countries too many. Also, Switzerland is likely to be the most expensive of the destinations that you listed.

Advice on what to see or do - what does your family enjoy doing? If you like hiking and the outdoors, then the reccomendations will be much different than if you said you all like history and culture.

Depending on where you go, you might find that with 3-4 people, car rental may be cheaper - I don't know if that's the case, but you should look into rentals. Also, if you want to visit smaller towns, it's generally easier with a car.

Cost out Eurail passes vs. point-to-point tickets; you may find that the Eurail passes are more expensive.

DEFINITELY start in one city and leave from another, otherwise, you'll lose precious vacation time travelling back to your start point.

Enjoy your planning!

Too many countries for two weeks with a low budget. The more hopping around you do the less you see and the more expensive it becomes.

I suggest you stick to two countries or 3 maximum and skip Switzerland. Visit family in Southern Germany for a few days (where exactly?) and spend the rest of the time in Germany and Italy OR Austria.

Oh and these days it's often cheaper to fly between destinations (low cost airlines) rather than taking the train.

It's a great thing to widen your kids' cultural world view at that age! Congrats on your decision.

Now to the nitty-gritty. M_Paris is right - too many destinations, too little time. If you stay with your friends for, say, 4 days, then you'll have seen one small part of Germany; that leaves ten days. A place like Florence takes 3 days. Rome requires 4+ days. It would take you 2 days of solid travel to even cross into Greece. And the further you travel, the expensiver it gets.

Add to that the fact that it's your kids' first time abroad, and you're setting them up for a bit of a cultural kaleidoscope experience that they might not be ready for. Take it slow. This is an "introduction" to Europe for them. Germany, Austria, and Switzerland do things in a way that are easy to process and cozy up to for kids. The travel infrastructure in these countries is more developed and dependable for a backpack experience than in southern Europe. Hostels are numerous and of higher quality than elsewhere. It is also surprisingly inexpensive to get around if you have a little information. I'd stick to these three countries in your situation.

I would not deter you from going to Switzerland. Hostels there are not impossibly expensive. A family room goes for 35-40 CHF per bed and includes a breakfast buffet at the Brienz hostel near Interlaken, for example:

http://www.sjh.ch/en/hostels/brienz/price

And there are "3 nights for the price of 2" deals at Brienz and other Swiss hostels too:

http://www.sjh.ch/en/hostels/brienz/offers

And there are incredible prices on advance-sale tickets from www.bahn.de - the German railways site. Let's say your friends live near Stuttgart. There's a 19-Euro fare from Stuttgart to Zürich, or a 39- Euro fare from Stuttgart to Interlaken; both these prices are totals - your 2 kids travel free with one adult ticket! These specials can't be bought now for next summer - you'll have to wait until 92 days prior to your dates of travel, when they first go on sale (assuming similar deals will still be available, of course, as they have been for years.) They sell out fast - so be diligent.

Germany's states offer daypasses for small groups and families like yours like the "Bayern" Ticket or Bavaria Ticket, a daypass that allows you to hop on virtually all regional trans and buses at whim for 29 Euros per group:

http://www.munich-touristinfo.de/Bavaria-Ticket.htm

(You can reach Salzburg Austria on the Bayern Ticket, by the way.)

Other states too:

http://www.bahn.com/i/view/GBR/en/prices/germany/laender-ticket.shtml

Germany alone has about 550 official hostels that offer good prices. But vacation apartments offer very competitive prices - usually under 50 Euros/night, like this place the 4 of us rented for 3 nights on the Rhine a couple of years back:

http://www.loreley-apartments.de/die_4_wohnungen_en.php

The best source for apartment is the local tourist office and their website. But here's a commercial site I've used to rent apartments in the past to give you an idea of what's available around the country:

www.accommodation.de

And check out Ben's pages too - they're a fabulous collection of places to stay with photos and details:

http://www.bensbauernhof.com/accommodations.html

If you're on a snug budget, an apartment means you don't have to eat out every night - the kitchens always have the basics you need to whip up a light meal.

Forgot to give you the German Hostel Association webpage: www.djh.de - and to add two comments:

1.) Some of these hostels are in castles, Diez and Bacharach among them. You might enjoy that experience.

2.) German hostels are filled with groups of screeching school kids on outings until roughly mid-July when summer vacation begins, but the actual dates vary by state. In August, the hostels are wonderful places, but they are unsupervised zoos 24/7 when school's in. I'm serious. I wouldn't take my family to them in June or early July.

I just spent 3 weeks in a town south of Rome with my 2 boys (6&8) . We visited Italian friends and got to soak in the incredible summer festivals in their surrounding towns. They cooked for us, taught the boys some of their language, soccer etc...Although my boys are younger than yours, kids deserve a chance to fully experience one place before jumping on a train to another , then another.
My advice for what it's worth would be to stay longer near your relatives then pick some highlights around their location. If you really want to, an overnighter to Paris would be fun so see the Eiffel etc.
Have lots of fun!! I love looking back at my photos and am already saving for another trip in a year or two.

I am afraid that seeing so many countries by train in only 2 weeks and wanting to squeeze in also Greece is just not realistic......
Forget Greece, as it takes too long to get there from Italy ( you would lose 2 days to ferry from Italy to Patras).
Seeing in a timeframe of 2 weeks Austria, Switzerland and Northern Italy is more feasible.

oops .. the thread was from September...
sadly OP never came back to say at least thank you....

Not totally sure why this was topped -- but the OP posted this one and only time 3+ months ago and has never returned. Don't think she is still reading this (and if she is - hasn't bothered to check back in)

oops #2 - didn't see clauser's 2nd post

Thank you, esp. to Russ for all the great information. Unfortunately life has gotten in the way of our plans and I have to put this off until maybe 2013.

Hedy - I really hope your family can make the trip happen in 2013. Life does get in the way, but I think this would be a terrific experience for your kids and that if at all possible, you should take this trip.