We went to corfu a couple of years back, my daughter was only one (had her birthday out there). We stayed in gouvia, not much of a beach, but the place was nice, a good beach for children was Dassia not far from gouvia, the water was fairly shallow.

We stayed at the gouvia bay apartments, good clean accomendation,nice pool and surroundings.

We didn't find gouvia too noisy, a relaxed feel to it-but certainly was entertainment if you wanted.

Good luck with your holiday search

All you really need is a sandy beach and calm shallow water and your 5 year old in particular will keep him/herself amused for hours! We've been taking our son since he was 8 months old and he absolutely loves it in Greece. We've been somewhere different each time - Kefalonia (Lassi), Skiathos (Troulos), Parga (Valtos), Stoupa, Lefkas (Nidri), Zakynthos (Old Alykanas) and last year Crete (Marathi).
Greeks love children and will make them very welcome so eating out is no problem.
It depends whether or not you like it busy but we tend to stay away from mainstream resorts and head to quieter areas, on Crete last year we stayed on the Akrotiri Peninsular a small beach resort called Marathi there were no other British children there at all, but our son who was 6 had a wonderful time, snorkelling, swimming building sandcastles etc. We had a car and travelled around which he also thoroughly enjoyed. We don't really like busy touristy places so never even got to the water park!

My theory is if a resort is featured in lots of different brochures then we don't go there!!
Good luck

PS Direct Greece are a great company and they go to some lovely places.
http://www.directgreece.co.uk