We took a family vacation to Vegas this past October; our children at the time were 3,7,9 - and they had a BLAST!! . We stayed at the Excalibur, there are some definite pros and cons. Cons - you have to walk through the casino to get to anything, and I found this to be the same with most of the other hotels. Although the casinos have what they call "state of the art air filtration systems" they ALL smell like smoke.
Pros - definitely the price!! We stayed for $45 a night!!! There was a nightly added charge of $6 and some change - but still, I couldn't believe how cheap it was. We took the kids to see the following:
Circus Circus- the circus and the amusement park were a great hit, as was the arcade. (several hours of entertainment for the kids)
Tram between Excalibur to Mandalay Bay with a stop at the Luxor.
MGM - Lion Habitat at MGM Grand -free but so/so we only stayed about 10 minutes
Fountains at Bellagio - free absolutely beautiful!
Mirage - volcano - free and really neat for the kids
Conservatory at Bellagio - my husband and I enjoyed it, and the kids were only mildly impressed
Flamingo Wildlife Habitat at the Flamingo- free my kids liked the flamingos - but this is only about 45 minutes of entertainment
Fremont Street Experience - the overhead TV was really neat with the various shows, however this was undoubtedly one of the most unpleasant of areas.
Mirage - Secret Garden and Dolphin Habitat - we all loved it
Shark Reef - we all really enjoyed this - especially the touch tank.
Various other rides and roller coasters around, as well as mm world, hard rock etc.
I recommend checking out this link to see things to do there, and then cross referencing them on Youtube so that you can actually "see" if it is something for your family. http://www.vegas.com/attractions/
Hope this helps!