I love Cancun, but you really DO need to know where to stay -- otherwise you will end up hating it like some of the other people have already stated (the drunken 20-year-old crowd).
I like the Palace Resorts chain. I've only stayed at the Sun Palace, though. It was very nice, room-wise. The beach is fantastic (as it is for all the hotels located on the "strip").
Of course, if you can afford it, the Ritz Carlton is THE BEST hotel I've stayed in (ever). The Ritz in Cancun is one of the cheapest of all the Ritz properties. The service is spectacular. The rooms are nice (with nice views). The food is $$$. So with kids, that may or may not be out of the question. You could always eat somewhere else.
I stayed at the Costa Real property some time ago and didn't care for it because of the beach. It wasn't located on the long strip of white sandy beach like a lot of the others...and I'm a beach person. If you don't care about the beach too much...then it is a fine property (and cheap).
If you are looking for a more laid-back type vacation, I would suggest Playa Del Carmen or something along the "Mayan Sun Coast". It is a bit of a drive from Cancun, but much more quiet -- less "spring-breaky". I stayed at the Royal Hideaway in Playa Del Carmen and it was fantastic. It may be a "no kids" type place though so you may want to check the age requirements.
I can't think of a better place for some sand and sun!
A couple of people mentioned Isla Mujeres and Cozumel. I visited Isla Mujeres on an excursion and it was cool, but I'm not sure I'd want to stay there. I didn't see anything that looked like a good hotel (but maybe there is now, that was several years ago). I haven't been to Cozumel (but heard the snorkeling is awesome) but was always under the impression that it was "dirtier". That could totally be off-base. I would research reviews of hotels in Cozumel before deciding on staying there.
good luck! Makes me want to plan my own trip!
Shonie