My wife and I stayed at the Abu Soma Intercontinental in March 2006 with our two boys (4 and 2 years old). The hotel is a true 5 star place with fantastic facilities including formal care for the kids. The watersports here are amazing, particularly the windsurfing and sailing. If you're feeling a bit more adventurous you should really give the kitesurfing a go. It's absolutely awesome.
One word of warning, don't expect the hotel to be particularly lively, it's huge and often not heavily booked but we loved it.
We stayed here on a package trip with
Mark Warner but you could just as easily book the hotel and flights separately. Loads of hotel sites allow you to book this place and if you're travelling from the U.K.
dealchecker.co.uk is a great place to compare flight prices.