In Key West, Good and not too pricey food can be had at Two Friends Patio Restaurant. I love their food and it's right off Duval.
http://www.twofriendskeywest.com/
On the way down if you take Card Sound Road instead of US1 you can hit up Alabama Jacks for some excellent conch fritters and other seafood and good prices as well. The entrance to card sound is just after Florida City on the left.
http://www.tripadvisor.com/Restauran...s_Florida.html
Havent been after having kids so cant help with kids fun stuff. Everglades is a posibility depending on their age. It's inexpensive and can see gators...
Fishing of the bridges in the keys is supposedly excellent, but must learn where and when and the tides ... Maybe a site online where you can get some help with when and where.
My coleague at work claims the best key lime pie anywhere is at Herbi's in Marathon. It's a dive. I haven't had their food but the key lime is quite good. I like Joe's Stone Crab's key lime pie better(In Miami).
Joe's is expensive, but excellent food if want to stop in Miami.
Obvisously plenty of latin and other good restaurants in Miami too.