Is it possible to limit the download rate/bandwidth used by Steam in some way? When I am downloading a game it greatly slows down or even blocks all internet activities in my house.
Yes as of May 2013. http://store.steampowered.com/news/10548/
Added rate-limiting of Steam game downloads, via Settings -> Downloads
I don't believe Valve provide an option to do that. The Connection Type setting that Corv1nus mentions appears to have no effect.
You may find it easier to install a piece of software able to rate limit other programs than to use QoS. I just tested NetBalancer (free version) with Steam on Windows 7 and it works flawlessly. If you too are using Windows 7, you can safely ignore the warning about unsigned drivers; at least you can if you trust the software publisher.
The consensus of a somewhat rude thread on the Steam Forums is that you can't rate limit Steam from within Steam. Your options seem to be: