We went to Lisbon with the kids and it was brilliant. They were aged 7 and 10 at the time. We also have a blog post about it:
We absolutely loved our holiday there but I would say, as I do in the article if you are going for a full week, to consider staying in Cascais near Lisbon (or even for part of the week). That way you'd get a beach holiday as well as a city holiday (you can travel into the city from there easily).
Hope this is helpful!