After eight years of being carfree with kids, and still using the bicycle for most things after buying a car when the kids hit middle school, I have to say that I really like my metal baskets. I have a big front basket, and I have the WALD folding basket referenced by kib above. I like being able to drop my backpack in the basket, and then I can pull my shopping bag out of the backpack, and put that, full of groceries in the basket and wear the backpack if need be.
Of course I have way too much other bike stuff. We have two Xtracycle equipped bikes, though my wife does not use hers any more. I use that one often if I'm buying fifty pound bags of dog food, chicken feed, etc, and sometimes for family groceries. I also have a
bicycle Revolution trailer. That holds a lot for a family.
But I think if I was just starting out and not shopping for four, I would go with two of the WALD folding baskets on the back, with cheap small bungie nets to keep things from jumping out.