This is Australia. Not the USA.
I think the Police made a prudent decision to investigate. The lab has very likely come across otherwise offensive material parading as "art" in the past and has a policy of reporting such silently under a standing law that is repeated in most Australian jurisdictions. Many labs do. Photographing kids running around the house in the nudie is fine — all parents do it, and have done so for eons. The point is you cannot actually showing genitalia — this is where there are clear laws in place that can assimilate your hitherto "harmless family snaps" with child pornography. There have been well-documented cases in the media recently (Victoria) of an artist having his works confiscated because he pictured genitalia and the faces of children he has randomly photographed. Bill Henson's works are another case in point, though the waters are somewhat muddied and there is no need to discuss his works here. Of the former artist, it was so bad the entire gallery was shut down and remains shut down. Kids need to be protected, now and into the future, because they are vulnerable; as a parent, you know that. It doesn't matter if the images are on film or digital, the law recognises both and the potential unwanted focus and harm it can bring in the wider public space (even by my understanding you have absolutely no intention of putting the images in the public sphere). I don't doubt you've done anything wrong, just fell into that space where the tendrils of the law have ensnared you. My parents photographed me running amoke, riding my trike, playing on the beach and floating in the bath. They came from an era of innocent and free spirit (the 1960s); images of that era are far removed to what we are seeing today. Rampant nudity, pornography... debauchery on a grand scale, including but not limited to, the involvement of children. But the world back then didn't have the saturating scourge of pedophiles who bide their time endlessly trawling the web and collecting images of children. Police have sophisticated means of tracking web visits about this, and also sourcing electronic images right back to the lab, or even the person uploading them. Labs are required to report, by law, any obscene, objectionable or pornographic material, especially involving children. You've been caught out even though your intentions were anything but to the contravention of the law.
Maybe speak with the Police to have the report reviewed, or take it up with a body involving civil liberties (I don't know in which State you are, but in Victoria that would be the Victorian Council for Civil Liberties). VCAT is also another option here in Victoria.
