Recently came back from a family holiday to Tenerife and we all absolutely loved it. I would certainly recommend taking your little ones there. DD (7) was in the pool all day long and DS (5) was never more than 10 feet away from the games room - he loved playing table tennis with the friends he made at our hotel.
We are keen to head back there next year as it's such a great place for a holiday - but there's so much of the world to see that we wouldn't want to head back to the same place twice! Where would you lot recommend? :-)