Wow, I'm almost a year late on this one, but I'll comment anyway....
How about giving children the CHOICE of doing either their own family, or another person's family? That way, if kids are embarassed about their own line (or if they just find their own line too boring), they can pick the Royal Family, the Kennedys, or some other person who had a more interesting, unique line.
In my university-level Anthropology class, we were doing a kinship study, and our prof showed us how to diagram family trees, showing various variations, e.g. divorces, multiple (consecutive and concurrent) marriages, etc., and challenged anyone to come up with something she'd not shown. Someone very proudly stood up and said, "my uncle had a wife and they had three kids, one in wedlock, one before, then he divorced her, and my other uncle married her, had kids with her, then divorced her, and the other uncle married her again. How do you diagram that?" (The prof, for the record, was momentarily stumped, as the kids would be both half-siblings and cousins simultaneously).
Even though this is a university level class (by no means exactly comprable to a primary school classroom), it goes to show that even a family embarrassment can peak the interest of people who are otherwise totally disinterested in history beyond what happened yesterday. Beyond that, it may be an interesting social fact that some children cannot do a family tree. We can incorporate this into a study of a changing society (e.g. our ancestors may have been very interested in this, but we don't necessarily care; we may be very interested in fashion, whereas they couldn't have cared less, etc.)
Beyond that, I think we should question what we really want to get out of a lesson such as this.... Looking at the Grade 8 syllabus for this province for English (that's what I'm currently teaching), related points this would cover include...
a) Students establish personal connections to their reading
b) Students use technology effectively
c) Students use the library catalogues efficiently
d) Students can do tasks in chronological order
e) Students can present information in various written formats
f) Students can explain how they determine fact from fiction
g) Students can critically analyse information
i) Students can cite their sources
Clearly, by assigning a family tree project, one is covering a lot of ground (even in Grade 8 English, and I imagine a whole lot more will be covered by assigning it to a Social Studies class).
In this century of political correctness, I realise we try not to offend anybody. But anything we do will be offending SOMEBODY. (Teaching the Anglo Boer War from a British perspective to a South African of Dutch descent can be offensive, as can the whole of WWII to a German immigrant).
Basically, as long as we can point out that we are not necessarily anything like our predecessors, we're doing fine. (Oh, and for the record, I've not yet assigned this to any of my classes...)