You do not need to buy MagicBands for everyone if you don't want to. You can get away without any MagicBands, if you so choose, or just one.
The ride photos are the only portion of the Memory Maker product that won't work without a MagicBand. All other PhotoPass photos can be linked to your account with a free PhotoPass card, which are carried by all of the photographers. Just ask for one when you have a photo taken; you can get a PhotoPass card for each member of your party and scan them at each photographer, so all of your photos will be linked to your account.
As others said above, you can still get your ride photos linked by scanning your PhotoPass card after you get off the ride.
However, if you choose to purchase MagicBands for a a few members of your party, you can link them to your Disney account and use them to add PhotoPass photos to your account. If your party is all in the same ride vehicle as you, then one MagicBand is enough. However, if you split up at any point to ride different rides at the same time, those in a group without MagicBands will have to scan their PhotoPass cards when they get off the ride.
You say your family is five people - would that be Mom, Dad, and three kids? If so, it would probably be most convenient for you to purchase MagicBands for the two adults, since the kids will most likely be with at least one of the adults all of the time. However, if you have an older kid who will be splitting off from the family now and then to do rides on their own, they may want to spring the extra $13 to get their own MagicBand.
MagicBands are a great convenience, not only for PhotoPass photos, but also when entering the parks and getting into the FastPass queue. They also come in handy if you're eating lunch at Be Our Guest restaurant, as the waitstaff uses your MagicBands to locate you in the dining room and deliver your food.
Plain solid-color MagicBands are $13 each, while the character MagicBands range in price from $20 up to $30 for limited edition versions. But you don't need to buy them all at once; you can buy them in advance, one at a time, to spread that cost out. If you want to buy them in advance, get them from the Disney Store online:
http://www.disneystore.com/magicban...searchTerm=magicbands&catalogFromSearch=10002