We traveled in March 2012, with our 2 boys (ages 7 and 9). Phillip Island was excellent, the penguin parade is a must. The bus journey was monotonous, it took over an hour to get around all of the hotels before we made the final pickup at Federation Square (just a couple of blocks from our hotel!!), the driver talked for the entire journey (2+ hours) without drawing breath. Whilst he had some great information, after about 10 mins it was difficult to zone back in to listen for the good bits. The farm was disappointing, the wombats were very cute but they were in quite small pens and I don't think their quality of life was very high, the kangaroos, etc were a little more free roaming so not so bad. The farmers/workers were a little abrupt and gave the impression that they would prefer not to have to resort to tourist $s. The koala sanctuary was well worth a visit. We would have liked to have spent more time at the koala sanctuary and the penguin parade and would happily have given the farm a miss. Next time I think we would rent a car and take things at our own pace.
We traveled in March 2012 with our 2 boys (ages 7 and 9). This is one of the best tours we have ever taken. The company had 13 guests split between 2 guides, the groups met up for lunch and shared information via radio when animals were spotted, so we all got to see koalas, wombats, kangaroos, eagles, frogmouths, emu and various other critters.
Martin our guide was excellent, very knowledgeable, and enthusiastic to show us as much wildlife as possible. He took time to explain things and was very patient, always making sure everyone in the group including my kids got to see what he was pointing out. He was also considerate towards the animals, ensuring that we stressed them as little as possible.
The picnic lunch and Billy tea were very good, they even catered for the kids (my youngest is the world's pickiest eater!).
Our boys were easily able to keep up with the walking pace/distances and I felt that they were engaged throughout. I'm not sure this would be an ideal tour for all 7-9 year olds (our boys are interested in wildlife and have spent a lot of time in the bush with us looking at bears, wolves, moose, etc.). If you have young children that don't know how to move slowly and stay still or quiet, I would probably leave it until they are a little older and can appreciate it more.