Labradors are incredible dogs (especially Lab mutts!), perhaps the zenith of Dogdom itself. But you really have to have a backyard of some sort to own one. They truly need an outdoor life at some level.
Yup. I would say any retriever is the best breed for both kids and fun. But all of them love to run and swim also. Irish Setters are pretty much in the same league. A small collie might be a good idea.