I can highly recommend Scala in Kefalonia (Greece). It has a lovely beach and it is a very friendly place. Not too big but not too small. I have been twice both times self catering and they were both quite small apartments.
Tamariu, a v small resort cove on the Costa brava - the hotel Tamariu looked v nice, but we stayed in an apartment. V small and pretty, with a selection of small bars and restaurants on a promenade alond a small beach. Or a slightly bigger neighbouring resort, Callela de franca (??). Not a place if you need 'entertainment', and would be packed solid in August, I think.
Thanks! Will definitely consider your recommendations. While searching for good holiday destinations, I stumbled across an excellent website called www.babygoes2.com, which recommends places to stay with babies.