When our kids were very young we had to make these same evaluations - and truthfully although things have changed in the last ten years, the field of available parties has shrunken due to things we have learned or stuff that's taken place - we wouldn't change out minds at this point - although we wish we had slightly more perfect choices. But perfect options rarely exist. In our minds we wanted more to rule out family members who we clearly did not want anything to do with raising our children versus family members who would be a perfect fit. We both had sibilngs who had financial & medical problems of their own doing, we also have family members whose religious beliefs ran VERY contrary to ours, and another couple of family members who seems to have mental health issues. So our decision came down to two of my siblings. Both are currently nearby but we expect that one is going to be moving about 9 hours away in the next few months. We're fine with that. While a move is never easy, particularly after a traumatic loss of both parents, a loving stable home is more important. This is especially true when the kids are young. When the kids are teens it's a little more complicated as it's tough to start over as a teenager. Skype, online video games & facebook make it easier - but it's still tough. For our kids I still think a move with my one sister out of state would be better for them - but I don't think that's a blanket statement for all teens.
But in my humble opinon I'd go with the stable environment 11 hours away - assuming your kids aren't yet teens. When they become teens it's time to re-evaluate and even ask their opinion. My kids (13 & 16) know what our plans are and they are secure with the knowledge of who they would be with if we were ever lost. But also keep in mind that family is always family and will always be there - while friends, no matter how close, often drift over the years. The families that we were close with when the kids were young are not at all close to us now. The kids grew up and apart as they developed different interests. When kids are pre-schoolers, even in elementary school we parents determine, to a large extent, their sports, activities, friends, etc. That all changes when they get to middle school and make their own decisions about their interests and friends.
This is a decision to be re-evaluated every couple of years. When we first made up our will the decision it was to keep my sister (who's a practicing witch) and my husband's sister (who is mobidly obese as is her husband & son, they are all disabled and they live in a filthy environment) from ever having any chance of getting the kids. Now, however, we've seen how other siblings have raised their kids (very leniently with bad results), seen another brother have an affair and child with someone other than his wife and the problems that's created, etc. we are more convinced we made the right decision.
We selected the two most stable siblings, who are most like-minded and they agreed that if both of us had died they would make a decision between the two of them (and their spouses) as to which family would make the most sense at the time. In the following 10 years my brother lost his job and he & his wife had many different interim jobs to keep income coming in until he found a permanent job, and my sister's husband became disabled & she retired. So while both of their situations changed during those time periods I am certain that between the two of the couples they would have made the right decision for my kids. PLUS - and this is important - there was enough life insurance between my husband and I - that it would not be a financial burden to take my kids in. They would have enough money to add rooms to their house or buy a new one, to buy a more appropriate car, to pay for food, clothing & education, etc.
Who ever would have thought that you'd have to make such decisions one day!