There could be a few different reasons for your situation. I would lean towards the theory that only one coat of finish, urethane or maybe varnish was applied to a poorly prepared surface. I'm afraid there is not quick fix to your problem. I would be looking at stripping and sanding the entire floor, clean away every spec of dust and refinish with at least 3 coats of high grade urethane. The surface MUST be lightly buff sanded and cleaned between each coat to give you a professional looking finish. It is a lot of work, but the results will be worth it.
The answer is "it depends" -- on what you need, on how well it's cared for, and how often you want to refinish it. Real wood is measured by something called the "Janka Hardness Scale" -- oak is a good choice, as it's rated at about 1300, with only more exotic woods being harder. I was told that Oak would probably be scratched by my dogs' claws, though, and I imagine that the invariable stones stuck in kids shoes will be worse. If it's possible, get real oak and make the kids take their grubby shoes off at the door... :-P
The "engineered" hardwoods are better because they're cheaper, but worse because they're not able to be sanded smooth and refinished. You'll usually see thicknesses plus a Janka measurement or an AC rating. The thinner the veneer, the more likely you are to crack through it no matter what the hardness of the veneer or the AC rating of the floor are.
For 100% composite stuff, such as Pergo and Kronotex, you'll see hardness measured on an "AC" scale that's basically a designation for how much traffic the wood is designed to bear in a residential or commercial setting. "AC2/Moderate Residential" will be too soft for your needs. "AC3 - Light Commercial/Heavy Residential" may be durable enough for your needs, but might show wear. "AC4/Moderate Commercial" is most likely what you'll need to go with, and it's harder to find and more expensive. However, it's less expensive than wood is no matter what.
Two things you didn't say... first, what kind of structure you're installing it on. Is it a wood subsurface, or is it slab-on-grade or slab basement? If it's on concrete in any way shape or form, you definitely want to go with something that is composite and less expensive. I know that you CAN install wood on slab-on-grade, but I would never consider doing it, personally. Second, what rooms is this going in? Wood floorings, regardless of composite or engineered or natural, is not good in places that will receive water on the surface or may be exposed to leaks. So the entry hall (front door and back), the kitchen, and the bathrooms are places to avoid having wood floors. I would keep vinyl or tile in those areas, or explore the wood-grain ceramics that are becoming quite popular for those areas or over slab-on-grade.
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Epoxy solutions in general last longer than polys. They do come with residential drawbacks too in that they are harder to patch and don't handle temperature differences as well.
I personally have used bona industrial for high traffic areas. I would really look into the industrial products so you don't feel the need of yearly upkeep.