Navy Pier is overpriced and crowded and touristy, but it is definitely cool from a kid's perspective. The children's museum is great if they're still young.
Macy's on State Street (formerly the Marshall Field's) is cool just because it's something like 12-stories high with a Tiffany glass dome - and the bottom floor has all kinds of fancy chocolates and stuff. If you have chocolate lovers, it can be fun to go look at all the chocolate and pick out a piece or two.
Field Museum is great for Egyptian stuff and dinosaur bones...Museum of Science and Industry is a bit of a cab ride, but it's super cool. There's some kind of doll house exhibit I remember seeing, a human heart you can walk through, some planes/subs/etc that you can check out, etc. Also, I believe they still have a water taxi from Navy Pier over to the Field Museum/Planetarium/Aquarium campus.
Restaurants - Rock n Roll McDonalds is pretty cool for kids...as is Ed Debevics, which is like an old diner and the staff members all have attitudes and sing and dance, etc. If you're into Chicago-style pizza, Gino's East is a requirement. When you're at Water Tower Place, check out Foodlife. It's basically a giant food court with reasonably palatable, affordable, and healthy options. They give you a card and you wander around getting everything you want and putting it on the card...then you pay all at once. Super easy and great for picky eaters
As far as hotels are concerned, I have really good luck in Chicago with HotWire. As long as you stick with 4-5 stars, you really can't go wrong - there are a ton of nice hotels in that area.
