People from the Philadelphia area have a phrase they use when they talk about visiting the Jersey beaches: "down the shore." As in, "We're going down the shore next weekend," or "We saw them when we were down the shore."
Well, I've been going down the shore since I was four years old, and it's always been to Ocean City, NJ. Not much has changed there since I was a kid, except that now my uncle owns a gorgeous house about two blocks from the beach and occasionally lets my family use it for free. If you're thinking about visiting the Jersey shore, I'd recommend Ocean City for a family vacation.
It's a dry town, meaning no alcohol is sold there. (There's a liquor store right before you cross onto the island, however.) Thus, there isn't an excess of partying college students to corrupt the minds of your young ones. If you happen to be a corrupt college student or other sort of partier, you may want to try another town. When I recently brought my boyfriend to OC for Memorial Day weekend, he asked me, "Where are all the bands?" He hadn't realized it was dry, and he'd been looking forward to seeing a band play in a boardwalk bar. Oh well, Sweetie, we'll find you some good live bands next time.
Below is some more info to help you decide whether Ocean City is right for your vacation.
Visit Ocean City between late February and mid-March to make sure you snare a good home for the summer season. My family has been in some really wonderful places, but one summer we rented a house that was infested with ants. We had to call an exterminator. It's not something you want to deal with when you're on vacation, so make sure you look early and look at a lot of places so you can make the most informed decision. Unfortunately, since I've never actually paid for one of our shore places, I'm not too good with rates. But I think spending in the area of $1000/week for a nice house isn't unusual.
I do know that costs vary at different sections of the island. The higher the block number (from about 36th Street on), the less costly your house will be. Meanwhile, if you go for something on 22nd and Ocean Street, you're going to be spending some bigger bucks.
For a few years in the '90s, some of the beaches were very eroded and pretty much unusable. But New Jersey has made an effort to fix that, and now, while not all the beaches are terribly roomy, there is some sand to play in among all that ocean. Beaches are guarded to 5 pm daily. The ocean isn't crystal clear, but it's not murky, either. Jellyfish pop up sometimes, but it's nothing to worry about.
The boardwalk is my favorite part of Ocean City, because when I'm tired of my family members, I can take a walk up there, visit shops, spend wrong amounts of money on bathing suits I don't need, drink some killer lemonade, people-watch, and maybe even get a walk or bike ride in.
There are also plenty of decent mini-golf spots and typical amusement park rides like roller coasters (they're all pretty mild), ferris wheels, and others that people have different names for.
There's also a water park that's worth a morning or afternoon of your time.
If you're looking for some good off-boardwalk fare, walk around the area of 8th and 9th streets, two or three blocks off the boards. You'll find some good Mexican, Greek, Italian and American restaurants, some casual, some less casual. There's also the famous Obediah's, a seafood place just outside the island whose roof houses a giant inflatable crab.
The best thing about the beach, though, is that you don't have to do any of these things. You don't have to do anything at all, if you don't want to. My brother and cousins and friends and I used to spend much of our Ocean City time crammed on a couch playing Nintendo. That's what we wanted to do there, and my memories of those times are just as fond as any of making sand castles on the beach or smashing into people with bumper cars. It's your vacation. Ocean City may not be the most exciting place to spend it, but it can be just as relaxing as any.