Having been there with an 8 year old, I suggest you do some online research with what your kids like to do. All we found to do were nature tours by land or boat. After the second tour, my DD wanted to go home. Maybe staying in Ocean City would offer more options and you could always take a day trip to Chincoteague. Our trip was 9 years ago so there may be more activities now.
Edited: As mentioned: bring LOTS of bug spray!
[This message edited by longtimewife at 4:29 PM, May 26th (Sunday)]