We stayed at Mellieha in the Maritim San Antonin last year with DDs aged 15, 5 and 1. Good hotel, we had half board which gave us the choice in the evening of the hotel buffet or a fixed amount to spend in the hotel's pizza/pasta restaurant which we did most nights. Beach is walking distance, just, but v hot - better to get a bus. The beach itself is v good, I think it is the best on the island, there's one other good beach but in general Malta is not good for sandy beaches.
A cheap attraction for young kids if you hire a car is the Playmobil factory shop - it's in the middle of an industrial estate, but it has Playmobil indoors to play with and an outside playground with life-size Playmobil to climb/play on. Not exactly high-tech but cheap entertainment, about £2 to get in (so long as you don't spend a fortune in the shop)
Our girls were happy just playing in the pool at the hotel, so it was a cheap holiday - we hired a car for 2 days to see the main sights, and took a ferry to Gozo, but in the main stayed around the hotel.