To be honest with you, if it's an '07 plate and the Mpg has dramatically changed, then you should take it back to the dealer to have it checked. 250miles is a very small range, but many factors affect this. It's a small engine size in not that small a car. I don't know the fuel tank capacity. Of course it depends how you drive it too. My sporty hatch only does 350 miles to a tank and that costs �50 a refill. Shudder. It's all relative, but I totally understand with a young child you'd rather spend your money on other things rather than fuel.
I cannot really suggest a model of car for you. The Picasso is rather favourably looked upon these days.
Best start is to check out the car magazines - What Car, AutoExpress and Auto Car. I think What car has a yearly magazine out at the moment too detailing the best buys in all categories.
Or you can look here too.
http://www.whatcar.co.uk/
You can search from the main page for the best MPV's and family cars. Plus you can read owner reviews too. Perhaps you could write one about your Picasso? Get some feedback if other owners have suffered the same fate.
The Picasso gets a four out of five on the What Car Site. It's a good car. Look into getting it corrected before you act rashly. It's a lot of money to lose. I actually fancied the Grand Picasso myself. Maybe not now.
Sorry I've not been more help. I also hope you wouldn't just listen to the first random person who answers your question online and recommends a car that ends up being woefully inadequate for you. You need to put in the research.
Good Luck