We came back from the ALgarve today. We stayed at Lagos but visited Praia da Luz twice.
I was reluctant to go to Luz, not because I was worried but because I have two daughters and was very upset about what happened to Madeleine Mccann at the time. I was persuaded to go for the afternoon and once I'd got over it being 'that' resort, I found it a very likeable and child friendly place, such that we returned a few days later for drinks on the beach.
I probably couldn't cope with staying at the MW resort, I'd find it too sad TBH but the luz area itself is really nice.
The sea was indeed freezing at Luz, however much warmer in other places such as Lagos, which is just up the road (I cannot account for why this would be). The food in Portugal was generally OK but the children's food was awful (I know, I know, they should eat what we eat - but my kids don't go a bundle on the whole octopus thing that's so prevalent in the Algarve!).
We stayed in a ground floor apartment we found through 'Owners Abroad.' I was wary of staying on the ground floor but felt the first floor more risky with a curious 3 year old that cannot be trusted not to climb. The owners assured me it was very safe (it had fences around it and a locked gate), however two men were witnessed trying to break into our apartment at 4am during the first week by pulling up the shutters. They were disturbed by a neighbour. I was completely freaked out and hardly slept any night after that. We ended up wedging everything with broom handles to prevent a break-in.
For the money you spend, I'd rather go independently. We paid £3,200 for four of us - this included flights with Monarch, 14 days car hire from the airport and a lovely two bedroomed apartment with shared pools (lovely apart from the security issue, obviously!). I would go back, and we toyed with Praia da Luz as somewhere to stay next year but we think there's more going on in Lagos.
I'd never stay in a ground floor (or otherwise accessible) apartment again though. We ALWAYS fully locked all windows and doors and had all the shutters fully closed but according to the neighbours this would not deter intruders as they can force the shutters up against the motor and lift the non-moving patio door up to remove it from the frame. The way to prevent this is to place batteries along the top of the frame to narrow the gap in which it can be lifted.