I dont have kids, but myself and partner will only go on All Inclusive holidays since our first one a few years ago. They are just great value, as long as you choose the right hotel. This year, we went to a hotel 3 miles outside of Ayia Napa, Cyprus. We didnt go for the nightlife so we were far enough thankfully. Food was great, entertainment for the kids and grown ups, kids club, pool, etc etc.
I would recommend booking with someone like Thomas Cook and Thomson (we booked with Olympic but they deal with greece mainly), and before you book, check websites like Tripadvisor.com to see what other people thought of particular hotels.
Been on a few A.I hols so if youve got any questions, fire away and I'll try to answer!