I would suggest Red Sea area of Egypt. Its good value, and there are lots of large resort hotels with 2 double beds in the room, so you could all go in together, without being to cramped.
Also with Sharm the both the AI deals are good value, but if you decide to go B&B eating out is really cheap.
You proabably need to be as close to Namma Bay as possible, as this is where the hard rock cafe, camel bar, etc are. The tour ops also do the usual trips, quad bikes, trips into desert, camel rides etc, and if you are feeling really adventurous (and have the funds
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) you can do a day trip to cairo to see the pyramids.
Good Luck.