You can access this from the main menu.
The screen you will see looks similar to this:
To create a family quickly and easily click on the "Randomise" button.
Otherwise press the arrows to control how many babies, toddlers, children, teens, adults and elderly you want in your house.
The blue arrows add boys and the pink arrows add girls.
You can add up to 8 people.
Press the "Accept" button when done.
You will then be presented with this screen showing your new family:
To change the names but keep the number of people in the family the same press the "New Random Names" button. To get a whole new family press the "New Random Family" button.
Thats all there is to it! Simple! :)