A car is not necessary but may be a good idea, depending on the specifics of your itinerary. If you're doing Arenal and Tortuguero it would make sense. If you're doing Osa and Tortuguero, it would not make sense.

You don't really need a car, but some people like the freedom that having your own car offers. We usually just reserve a private driver through our hotel to get from the airport to hotel or to go between cities, and then we use taxis once we're at the hotel. Tortuguero doesn't really have roads; it's canal-based so a car wouldn't do you much good. We use Nature Air or Sansa to fly to the Osa; driving there would take quite a while. If you do tours, they'll usually pick you up and drop you back off at your hotel. We used Desafio's Jeep Boat Jeep service to go between Arenal and Monteverde.

Even before deciding about the transport you should decide about the places to visit. The ones you mentioned are top spots in Costa Rica but logistically at least 2 full weeks are needed to visit them all. In 10 days Monteverde-Arenal-Tortuguero is more then enough. In 7 days two of them or fly to Osa and drive back. Driving in Costa Rica is not that much of a challenge however some roads are unpaved and the average speed is low so you need more time to drive from point A to point B then you are accustomed to. OTOH for a family of 4 shuttle transport can quickly add up; using a private transfer will be same (or lower) cost but much more comfortable and enjoyable (if choosing the right driver).

The only times we have ever felt that we NEEDED a car was when we rented houses and had to buy our own food. The problems (challenges?) are lack of direction signs in some parts of the country, dangerous drivers, and damaged or poorly maintained roads in some parts of the country. It is possible to plan where you go and what you do so that you don't NEED a car to have a good time. Some people feel that they need a car for other reasons or for personal preferences.

If you are planning for this December, you need to book everything quite soon.

If you do rent a car, be sure not to leave anything of value in it unattended. Breakins aren't that uncommon.

I traveled around CR for 3 weeks with one other person a couple of summers ago, and we did so entirely by public transportation and a fairly limited knowledge of the Spanish language. It was really easy and CHEAP, though maybe a bit more time intensive than having your own vehicle would be. Most people would say that having your own vehicle allows for greater flexibility with your plans, but I would disagree in the case of CR because the public bus system goes frequently to many of the most popular tourist destinations/larger cities, and to smaller places as well due to the fact that most people actually living there don't have personal cars. We literally went all over the place and to some obscure small towns without major issues. Sometimes the buses are a little late though, so make sure you give yourself some time between connections! And if in doubt, ask a local!

Taylor, I do imagine that the other person was an adult one?! and that you traveled light, with only a backpack?! Now you imagine yourself on the bus stop in say Cartago with two kids, four full size suitcases, having to cross the town to reach the connecting bus which leaves in 30 minutes??!! I think this family NEED a car; if only for a transfer from hotel to hotel, or a rental car that is another question.

I agree, Xelas; the situations change for each type of travel in CR. Retirees, young solo travelers, might like to hire cars, pay for taxi cabs, or use a bus. A family (unless they are all fairly adult backpackers)will find it easier to get around and do what/when they want with a car. In addition (looking into the distant past), there's the fact that vacation time is quite limited and therefore precious, and any time saved is more vacation. (Also,schlepping your kids (and their luggage and issues) is one wrinkle taken off the plate.)

Traveling with kids, I'd recommend Arenal and Manuel Antonio personally (I'd skip Monteverde unless you don't mind a longer drive). There's enough to keep the kids busy without having to spend a ton of money and get more flights (like if you go to the Osa). You can hire a driver if you don't want to drive. We used Wilson (wilson_elsy@yahoo.com) and thought he was wonderful- lots of great reviews on here for him. Driving to either place is also very manageable from San Jose, just not at night. We've used a GPS and had no problem. Hope that's helpful!

The kids are 10 and 12, so I would assume that they are old enough to handle their own luggage. No extra schlepping by mom and dad should be necesary.

Interbus is another option. It does hotel to hotel transfers.