In direct answer to your questions:1) whats the best cruise ship for this age and how long should it be?
Pretty much all cruise lines have facilities for all age groups. It's generally accepted on board that there will be kids no matter what type of cruise it is so there is likely to be kids clubs and regular children's activities. Because of this, you can pretty much take your pick of which cruise line you look at.
How long you cruise for comes down to personal preference. Do you think your family are suited to cruising? Being it's your first cruise, perhaps something that's 3 or 4 days or a 7 days cruise with plenty of shore stops would be best. I'd minimise the number of sea days for a first cruise. 2) how far out can you book a cruise?
I have cruises booked through to 2015. The cruise wholesaler I use has dates available for cruises all over the world through to the start of 2016 for some cruise companies. All you pay is the deposit until 90 days before sailing and this locks in your price. I think booking earlier is far better than leaving it to the last minute. 3) And which is it better to go thru the cruise company or a travel agent?
I dislike travel agents, they will make you pay up front most of the time and then leave your money in their accounts until such as time as it's time to pay the cruise company - which is at the 90 day before sailing point. You are better to use a wholesaler like I do and only pay a deposit to secure your cruise until the balance is due or book directly with the cruise company if the wholesaler can't beat the direct price. Either way, the money stays in your bank until it's due to be paid in full which is much better for you.
Really you need to ask yourself where you want to leave from - Australia or overseas, what you want to see - are there any places that cruises go that are on your "must do" list and what is your budget/time frame like? As PP's have said, P&O is targeted at more casual, family cruising without the flash and dazzle but I wouldn't say they are cheap for what you get at all. I am continuously amazed at how much they charge for their cruises and am hoping that with the arrival of some competition to the Aussie market in the form of Celebrity Cruises, Carnival Cruises and the like, they will drop their prices somewhat.
For me, cruising is an amazing way to holiday. I adore it and have been obsessed since my first cruise. We started with 7 days around the Hawaiian Islands with the sailing done at night and each day in port so there weren't any sea days. We took to cruising right away and have since done 3 more cruises around Hawaii that were 7 days each, a 4 day cruise around the Bahamas, we're about to do a 3 day cruise from Brisbane to Sydney and, although it looks like our cruises are getting shorter in duration, we are taking a huge leap and doing a 19 day cruise across the Pacific Ocean from Hawaii to Sydney in October and we can't wait. We took baby steps into doing a longer cruise and now we're looking at doing a 103 day around the world cruise in a couple of years if the 19 day one goes well - which I now have no doubt it will.
I hope you find something that suits what you are looking for and have a great trip