If you're looking for family-friendly lodging in Nozawa Onsen, The Schneider is worth checking out. The location is clutch - you're right on Hikage Ski Area, which any parent who's lugged kids and ski gear around will appreciate. The town itself is tiny, so you're never really far from anything.
They give you options between Western or Japanese-style rooms (always good to have choices when traveling with family), and they've managed to keep it relatively budget-friendly, which isn't always easy to find in Japanese ski towns. The in-house restaurant means you don't have to drag tired kids through the snow looking for dinner, and parents can wind down at the Basecamp Bar once the little ones are asleep.
Just keep in mind that Nozawa Onsen is a small place - we're talking really small - so wherever you end up staying, you'll be able to access everything pretty easily. The Schneider just happens to be one of those spots that makes the family ski vacation a bit more manageable.