Just returned from a Greek island (one of the closer ones) which was a 3.5 hour flight. Flight was super cheap (easy jet, Thomson and Thomas cook all flew there so lots of choice), beautiful weather, loads of cheap villas (we got ours from homeandaway.co.uk or something called something like that)! Great exchange rate too
Have a look at P & V which covers France and some other areas. The resorts are well set up for groups and families. Book a size up from your number of people in group as they do tend to come up on the smaller side and basically furnished. You can often get a good deal off peak.
We'll be going on hols for 14 nights mid September, with DS 3.5 yrs and DD 1.5 yrs, plus grandparents. Ideally I would like to stay in a villa resort do we have a kitchen as washing machine, but can meet other families and walk to restaurants and bars ie not have to cook all the time! We like sightseeing and going to the beach but would probably spend around half our holiday in resort.
Any recommendations welcome for flight times under 3 hrs away - Spain, Balearics, Sardinia, Italy, Sicily, Croatia.