The Ocean Club and Waterside village at Praia de Luz suited us when our kids were young, but it's a few years since we went so you would need to read up to date reviews before you book incase it's changed. You can get one or 2 bed apartments there.

The beach is excellent and its not 'clubby' just a nice family resort. We had a hire car and got to zoo marine easily but there are organised trips if you don't want a car. We also went to a couple of waterparks which the kids liked but I cant remember their names. :hmmm. Someone else on here will know. Went into Lagos quite a few times to eat of an evening, but there are probably enough restaurants in Luz if you dont want to do that.

Also went into Silves and looked around the castle which the kids liked and was a good afternoon out. We did a Portugese night with traditional food and dancers they liked that as well. It was no where as near tacky as a lot of the trips you get on a package holiday

Depends on what your kids like to do really. Algarve is a good destination for families IMHO, short flight and lovely beaches althought the sea can be a bit cold (atlantic not Med) Good luck whatever you book.l :D