I've been to Portland a couple of times in the past two years, and I've been to Seattle as well, but that was over ten years ago. Both cities are beautiful. My information on Seattle is old, so I'll just say a bit about Portland.
First, check out this old thread that has a lot of information on Portland and areas within about a three-hour drive:
http://www.dcurbanmom.com/jforum/posts/list/295703.page#3359689
Lots of good information there.
I would probably try to find a good condo or home on VRBO - that's what we have done. You could go for a bigger rental in the close-in suburbs, or you could go for something more in the middle of Portland. One amazing thing about the central areas is that the light rail is amazing. The streetcar is pretty great too.
I've been to Bend, and I didn't think it was that great. There is a lot outside of Portland that is lovely: there's the Columbia River Gorge, Mt. Hood, the coast, the Willamette Valley (which I associate with wine, but there's probably more
I don't think you can go wrong with either city. The Pacific Northwest is so gorgeous, and summer is the right time to go.