Have you spent any length of time at all in Portugal?

Southern Portugal and the island of Madeira are probably the best options assuming that you and/or your wife will be looking for work and that neither of you speak the language as they are the main tourist destinations where you don't have to actually speak the language to make do.

Both the Algarve and Madeira have decent english speaking schools for the kids and an active expat community.

Just about everywhere in Portugal people speak English to some degree however no matter what they say, they really appreciate it when you at least attempt to understand the Portuguese language. Having grown up in Portugal and having lived in the Algarve, Madeira, Lisbon, Coimbra and Porto over the years, I can say that it's a great place to grow up, as long as you get into the language.