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We were in a similar situation last year when we had to choose schooling in Portugal for our son in a short amont of time. Eventually we settled on the International School of the Algarve (just outside of Lagoa) because we'd been told that the local schools can be difficult and don't really offer much support for English speaking newcomers.
The ISA had great facilities, was fairly large, and had a reputation that preceeded it. So far our kids our really happy with it. We're from the UK and they even follow the same reading scheme as they did when we back home. Plus, they take Portuguese lessons so they're becoming fluent in the language.
It's a big decision and I won't lie, the international schools can be VERY expensive. Children are certainly adaptable, and if you put them in a local school they're likely to pick up the language quickly. That said, they still may feel alienated by the language barrier and the difficulties that come with cultural assimilation initially.