Valencia area is lovely. Gandia has miles of golden sands, there is a water park at Cullera, a safari park in Denia and the mountains behind Gandia are beautiful. Benidorm/Guadalest are close enough for a day trip too.
Mallorca is gorgeous and very child- friendly. Check out the north and east of the island - Pollenca or Cala San Vincente are nice, but all that area is. Lovely beaches, restaurants, decent water parks and caves.
Hi! I would second the Valencia region as a fantastic área for children, especially the ones your age. North of Valencia there is a waterpark (Aquarama) at Benicassim, there is also a Brand new zoo (the Bioparc) with áreas where you can walk amongst the animals, as well as the Ciudad de las Ciencias (spelling?!) which is a massive science museum and has an amazing aquarium. If you were to stay north of Valencia you could get to Reus in a couple of hours where the big Universal Studios theme park is (Port Aventura). Its also the home of Paella and you can take a boat trip around the rice fields which is lovely. The best beaches north of Valencia are part of the national park Sierra d'Irta so there are lovely nature trails if you like that sort of thing. You could stay as far north as Peniscola which is an amazing walled fortress town.
Barcelona is also fantastic but you might feel a bit trapped by the hustle and bustle and want something a bit quieter.
I live on the other coast (North West) but it isn't nearly as child friendly.
moraira is really nice with great beaches for little kids and plenty going on at night, fair, music etc.. if you want a villa there are plenty have a look on google around La Fustera or El Portet we stayed in the hills about half an hour inland at super duper place for little babies.. heavenly