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Madeira-Besides Funchal where would you stay?

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I am trying to get a family vacation to Madeira together for Christmas 2013 and it seems as though most of the places in the Funchal area are already booked. I was looking for a place for myself,hubs and two adult children that would have self-catering. I don't want a hotel or be where the majority of holiday crazies are.
East of Funchal seems to be where I think our family should stay but am confused as to which area?
Does anyone like the Canico area or Garajau? Is there somewhere east of Funchal yet not too far away that you would recommend looking for a rented house/villa,etc. Thanks so much! Everything that I was interested in on places like Holiday Lettings,Booking,.com,etc. are already booked.

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