Mikey,
the beaches at both Lancelin and Gero are ok (Gero has more choices) but at New Year ... all things being right with Huey ... it should be windy as.
i.e. swimming and general beach activities with the family till (at the latest) 10am, then the wind starts to kick in and make the beach uncomfortable.
All this depending on the size of the rug rats of course.
Lancelin is just a little fishing town, so theres not much to keep the non windsurfing fraternity busy. There's some huge dunes which are great for sandboarding or dirt biking if your into that.
Gero is a mid sized city so there is the usual raft of restuarants, coffee shops, fashion shops, even KFC and Maccas

BUT I would suggest you visit Lano, Cervantes, Green Head and Gero ... there all great.