I commute everyday and we go out riding on the weekends pulling the kids in a trailer. We only drive on weekends, and even then only if it's going to be far or we're going inside somewhere (like a mall) for a while and don't want to leave our stuff locked up where it might get stolen.
Our house is central to everything we need to go to. Work is 3+ miles, the mall is 1, my son's cancer doctor is 4 miles, we have four kids parks within a three block radius and two of them have wading pools.
My wife walks everywhere with my boys, we bought a nice stroller (Mountain Buggy Urban Double) for her to use so she doesn't need the car either.
So we're not car free but we only have to gas up the car every 6 weeks. Of course in the winter there's no cycling here so car use goes up.