Re: Family learning and fun time
My very first sail was on a Sunfish at a Red Cross sailing course. Later I was instructed on a Flying Junior, which is a much better set up for really learning to sail as it had a main, a jib and a spinnaker. If the adults are agile enough to quickly move around a center board dinghy, then that is a great way to learn as you get almost instantaneous feed back on the actions you take and capsizes are part of the training drill.
All sailboats are ballasted, just a question of whether it is lead or you.
Five years old is a little young, but, depending on personality, do able on a sunfish with one sail. And yes a regular size adult and youngster can both fit on a sunfish.
Sounds like you have enough people for a small regatta.
Go for it (wearing life jackets).