Andrea did a great post called Rug Basics. If you haven't read it yet, you definitely should. Just like a rug can anchor and unify a space, a rug can also make a room look awkward and mismatched if its not sized properly to your space. There are various "rug rules" that sometimes contradict themselves depending on who you talk to, but a general good rule is that (at least) the front legs of your furniture should sit on the rug (some say the entire sofa, or piece of furniture should be on the rug). If a rug is too small it can look like its floating in the middle of your space which doesn't help to make the room feel anchored. But really, just read Andrea's post (linked to above) for great general rules and favorite online sources for rugs.
I've had my eye on a Madeline Weinrib rug for a couple years now (similar pattern to the top middle rug shown below). I know I wont ever buy it because I can't justify the price tag. Luckily for my conscience and my wallet, there are some great inexpensive options for us out there. I've pulled some of my favorite rugs from Rugs USA that are all under the $300 price mark (some are under $200!), based on a 5x8 size rug size.
These options are pretty, right? I really love them all and could have easily kept adding more and more to my group. Most of the options found below have different color options as well, so keep that in mind if you see a pattern you like but don't love the color, click the close up images below to see other color options!
Damask Trellis Green Rug
Safavieh Thom Filicia
As a side note, having two kids myself, it's important to consider cleaning methods. I've had too many things on my rugs/carpet that weren't supposed to be there... like, my 2 year old's adventures in taking off his diapers to see what happens... you know where I'm going with this. We have a no food and shoes rule in the living room (which is room you walk straight into from the front door) but of course things always happen. I bought Natures Miracle Stain and Odor Remover a while back from Amazon, and have been amazed at what it's gotten out of my rug (for example, a berry smoothie on the white part of my rug) and am seriously happy with that purchase. I used Scotch Guard on my couch with great results, and am thinking that could be another way to protect your rug from stains. Have any of you tried it? I'd love to hear your opinions.