I'd go for it in your position. I'd be looking for a Mondeo sized car when the eldest gets to about 12 though as I found with my own experience.
I'd be very happy to swap my baby Merc for the VRS Fabia now my eldest has got her own car, and I've only got the youngest to ferry around (merc has a huge rear seating area though - more leg space than my 4x4)
Skoda is a VW with a different badge.
I was very tempted to go for an Octavia VRS (ex plod car) before I got the merc, but my missus wasn't happy with the size of it (makes no sense to me as we had a Xantia which was of a similar size

)