Hmm, sorry it's taken me so long to answer this thread - today was crazy busy...it's always like this for us right before the new year (lots of business resolutions

)
As a general rule I feel like giving your work away for free isn't completely necessary - *but* if you're truly getting something out of it (and in this case you'd get an expanded portfolio and some nice promotion hopefully) and it feels like it weighs well for you then go for it.
I, personally, would prefer to be paid, even a discounted amount. Work is work.
Also, be sure you cover any future updates to the site, etc. in your agreement with these people - otherwise you're going to end up working for free for life

and just because they may be friends or family doesn't mean these kinds of statutes aren't important. In some ways they become even more so simply because of the assumptions that may otherwise be made based on familiarity.
Whatever you decide to do - best of luck and have fun doing it!