The up and coming release of FrontPage as part of Office 11 or as a standalone program is superb. It is by far the very best release I have ever seen and I'm including all of the Office 11 programs in that sweeping statement, not just FrontPage.
I think you have already answered your own question to a very large extent though. You specify two things straight away; your level of need (family website for news and pictures etc) and your budget limit. I only wish more people kept a handle on those two prime requisites before making purchase decisions. Nobody can decide for you, but I would say that if the version of FrontPage you are currently using is serving your needs well, why change it at all ?
I design websites professionally and I still use FrontPage 2000 quite a lot although I do spend most of my time in the current version (FrontPage 2002, sometimes called FrontPage XP) and a lot of other software. Keep in mind that the program is there to make your life easier and more productive and efficient. The designer can design regardless of the editor he or she uses, but the editing software should be a hige help and speed advantage. I can't think of any other web editor that is more adept at this than FrontPage from version 2000 onward.
Unless you have some pretty exotic needs, you could do far worse than save your money and keep using what you currently have, as long as it meets your requirements. As your needs grow, so could your demand for software.
The up and coming release of FrontPage really is unbelievable, but if you're a die hard Dreamweaver fan you'll probably stay that way and keep both feet firmly in the Macromedia camp. There are still some things that Dreamweaver is far better at, but there are a great many things included in FrontPage 2003 that I really wish Dreamweaver could do as well or even at all.
I have a totally different view on web design than a lot of people so my ideas of editing software are not nearly so unequivocal. I like and use FrontPage when it suits my purposes. If another project is more easily produced in another product, as long as I have the program and am fully familiar with it I migrate to it for the duration of that design. Despite my fondness for Macromedia products though (as well as others like Adobe GoLive, Namo Web Editor, HotMetal Pro and CoffeeCup HTML Editor, to name just a few) I do the majority of my web design work in one or another version of FrontPage.
I'm not saying that you shouldn't upgrade, just that you might not necessarily need to.
Features on Office 11, including details of the new release of FrontPage have featured in most PC magazines lately, including PC Advisor, but no doubt there will be more as its release becomes imminent.
I hope this helps.