Scotman84's reply isn't entirely accurate.
From 5 October 1998, it has not been possible to have a new passport issued which includes the holder's children. Neither has it been possible to have children's names added to an existing adult passport. So, when you come to renew your passport, you will have to acquire separate passports for yourself and each of your daughters.
However, any passport issued prior to 5 October 1998, which includes children, remains valid and the children named on it do not require their own passports. There are just two exceptions to this:
(i) children travelling to the USA must have their own, machine-readable passports; and
(ii) as has always been the case, children reaching the age of 16 must have their own passport.
So, as long as your daughters won't reach the age of 16 prior to your return from Ibiza, there is no need for any of you to apply for new passports.
To answer your original question:
For travel within the EU, any passport issued by an EU member state remains valid for travel right up until the date of its expiry, so your passport will be OK for travel to and from Ibiza in May 2007.
Chris