My wife, 8-year old son, and I just returned from a 8-day stay in Bethany Beach. As a child, my family and I spent vacations in Rehoboth and the Delaware Seashore State Park. In my teens, we went to Ocean City, MD. I'm 35 now, and I can honestly say that this beach-town is just about perfect. The locals I encountered were friendly (but most of the retail workers were not). The boardwalk is not as crowded as Ocean City's (and more importantly, it's devoid of the drunken 20-somethings). The streets are not as backed-up with traffic as Rehoboth's. We had a parking permit, and there was plenty of parking available close to the beach. For inexpensive eats, I recommend Five Guys Burgers and Fries at the beach, and Grotto Pizza. The travel time to Rehoboth and Ocean City isn't all that long (if you choose to visit). My son is a mini-golf fan, and the 7-mile trip to Viking Golf in Fenwick Island was well worth it. Coming from Pennsylvania, the lack of sales-tax and cheaper gas prices help out down there as well. If you're looking for a family-friendly beach, this is the place.
I can't decide whether to venture into Ocean City this summer (I haven't been there in 25 years, since I was a kid) or try the Delaware beaches. I live on the coast in CT, so I don't need quaint beach towns, my young kids are looking for a little more to do. Any suggestions?