Well, I grew up in suburbs around the west of Montreal (Ile-Perrot, Vaudreuil-Dorion, Pointe-Claire, Sainte-Anne-de-Bellevue), but there's not much to do there!
In Montreal proper, if you want something to do in the daytime with kids, there's always La Ronde, the city's theme park on Ile-Sainte-Helene. Also, you could walk the path up to the Observatory on Mont-Royal, for a spectacular view of the city. Walking on St-Laurent and St-Denis streets is also fun in the summertime. Throughout July and August, there's a whole crapload of festivals to see, such as the Jazz Festival, the Just For Laughs Festival and a few movie festivals. Montreal rocks during summer!
As for places to stay, since I actually lived there, I can't really help you... sorry!