There are a lot of people who have personal websites that they use to keep track of family. I have seen a few different types, but it seems that most of them are setup to be mostly a replacement for the photo albums that were always laying around especially at my grand parents house.
I think this is actually a good thing, because it allows you to put more than just pictures. In a personal website, you can put descriptions or even stories with the pictures. And maybe in 25years when your now 3 year old is having his or her first child, you can show them the websites with all the stories of your sleepless nights and all the pictures of the sweet baby that you were so happy holding while you both caught a short nap…
This also makes it easier for families to keep up with each other. I live a good distance from all of my family except a few cousins. I am not good about visiting them, and am really bad about visiting with the rest of my family as well. I hope that by creating a personal site that my wife (and maybe I will help) can keep the rest of the family "in the loop" as to the happenings in our lives, and maybe that will encourage them to keep us in the loop as well.
Another good reason to do a personal website is that it gives me an opportunity to tinker with things that I don’t normally mess with too much. I am a Systems Engineer, not a programmer. Tinker with my website(s) lets me pretend I understand what it is that programmers do. (ha)