We tote our kids (2 and 4 - about 60 lbs or so combined) in a trailer. Mr. Fish is planning to do the commute to school with them in August. It's only about 2 miles from the house.

My personal opinion is that a trailer is much safer than a bikeseat. There are the balance issues and of course - if you fall, the child comes crashing down (as stated earlier). Just make sure you get her a helmet to wear in the trailer! I see too many people around my town riding without helmets and towing kids without helmets in trailers. Specialized makes some really fun helmets for toddlers/kids.