My uncle and cousins live in Peoria--and my cousins are raising their families there. Peoria is one of the 'major cities' of Central Illinois and I've always enjoyed visiting, as it does have a smaller town feel.
I think what bcat85 is getting at is Peoria is, well, not Chicago. It does lack the culture and the allure of a big city. Some people do not deal well with the lack of such stimulation that a bigger city provides. Although I'd have to say that, outside of Champaign-Urbana, Peoria is a cultural hub of Central Illinois (as surprising as that seems to many).
Yet, Peoria has some great amenities for families. They have a minor league baseball team and a new(er) stadium. They have a water park and many great parks/playing fields. They're currently building a museum on the riverfront. There's even a riverboat casino that's all the rage.
That being said, there are some areas of Peoria that are not too nice, where crime rates are higher. However, the bad areas of Peoria pale in comparison to those of Chicago.
If I had a family, I'd choose Peoria or Urbana-Champaign over Chicago when deciding between the UIC campuses.