But do they do anything for your family?
They ARE called magic fish
Are the people in your family happier
or something?
No. They don't appear to do anything for your family in VF other than the initial slight raise in happiness that comes form purchasing any of the upgrades.
When your little person has the action line "Looking at Magic Fish" I believe they are actually lookig at the picture of the fish that hangs near the aquarium. It is called "Magic Fish" because of the connection to Fish Tycoon. Finding the "Magic Fish" in Fish Tycoon and is the point of the game. The fish in the picture is also in Virtual Villagers 3. In Virtual Families they are just something amusing for LDW fans to be entertained by. There are other elements from other LDW games in Virtual Families as well. The picture of the map in the bedroom is the map of Isola, the location for the VV series.