If you decide to drive, try a so-called K-Car. They are smaller cars with small engines but are sometimes cheaper than the normal cars. You cannot go as fast but the max-limit is 80km/h on the highway anyways. And there are K-car Vans wich should be enough for 2 adults and 2 kids. Ah, the highway-toll is also a bit cheaper with this kind of car.
I found driving in Japan not to difficult but i generally stayed out of any huge city-centers. I have been driving in Kobe and Hiroshima and that worked out quite well. If your car doesnt have a navigation than get an Roadatlas (they are available in English) and you should be fine. I think anything outside the Tokyo-Area and maybe Osaka should be ok to drive. Signs are generally in English as well!
I always drove on smaller roads because of the high fees on highways and because i had time and its a good way to see a different Japan. Especially the roadstops are interesting, they are called "michi no eki" and there is an english map available wich shows all of them.
nippon-rentacar has some information on renting of k-car (yellow plate) cars
Rental Rates
have fun