We certainly enjoyed our stay at the Paraiso Albufeira in February this year. Its well located and the Old Town and the Strip are both in walking distance although the hotel runs a courtesy bus a few times a day. Alternatively you can use the little mini train that stops nearby. This will take you to the escalator near Fishermans Beach or along to the Strip. You can buy an all day ticket and hop on and off as many time as you want. Sure the kids will love it. Taxi stance nearby, costs about 3.50 euros to go into either the Strip or the Old Town. This just takes 5 minutes.
Practically right on the doorstep you have the huge supermarket Modelo which sells everything and another supermarket Pingo Doce is just over the main road. Shops, bars, restaurants all nearby too.
You can go self catering at Paraiso which we did (although we didnt cook) but ate out every night. Theres was a good size fridge in the room which was very handy. Loads of lovely restaurants but one of our favourites is Os Compadres, in a little square at the top of the Montechoro Strip. Good food and a terrific price. Also the Cottage next door is worth a visit too.
Theres lots of regulars on this forum who give excellent tips and advice so I am sure you will be offered some more information
by others. if I can be of anymore help, please ask.
My husband and I agreed that we would definately go back to the Paraiso altho our next visit is to the nearby Forte do Vale.