You can get babysitters (daughters of the hotel staff) for EUR 12 - 15 per hour if you want to go out in the evening. Hotel is über child friendly and service is abundant and generous (rare in France!). Food is fab.
We did Crete many years ago in October (beginning of) It was sunny enough for dh to burn, though that can't be guaranteed!
The sea will still be very warm - it takes time to cool down. i think to maximise your chance of drier weather I'd chose one of the Islands on the east side (or if you do crete, on the eastern side) as low pressures start to move in from the atlantic at that time of year and it could give you some protection from any early bad weather.
Yes, we had one of our very best ever family summer holidays! It was so relaxing. The hotel was super peaceful but Saint Trop shopping/cafés/sleb spotting was right on the doorstep (the hotel can chauffeur you for EUR 5 a journey) and there were lovely outdoor restaurants nearby (will give you addresses if you decide to go!).
Just back from Greece, which is not cheapo AT ALL. If you do really want to go though, then I would say Crete in OCtober should be lovely. Otherwise, you could always head to somewhere like Egypt, which should be lovely, and is much more cost effective. Not too hot in October. What about the Red Sea?