Boardwalk options:
Flying Fish - upscale. I wouldn't take my toddlers there. We are going there this year, our youngest is six and may yet end up over in the kids club.
Spoodles - Casual sit down Medditerrian and tapas. A good moderate casual family restaurant
ESPN - A sports bar. Haven't been, I don't find TV and food to really go together.
Big River Brewing Co (or whatever its called). A fairly small restaurant. A lot of people have panned its food. Haven't been myself.
At the Y&BC (walking distance)
Beaches and Cream - a hamburger and ice cream joint. Very small restauant, doesn't take PSs, so time a visit in the off hours to avoid a long wait.
Cape May Clambake - A seafood buffet, I'm not big on buffets with little kids, but other people like them - little ones (under 3) do eat free at the buffets. Hosts a character breakfast
Yachtsman steakhouse - Steak, fancy. I wouldn't bring kids.
Yacht Club Gallery - basic hotel cafe.
Swan and Dolphin
bluezoo - a Todd English restaurant - wouldn't bring kids in here either.
Fresh - a buffet, not open for dinner.
Gullivers - Garden Grove - don't know much - used to do a character dinner
Kimonos - sushi and karaoke - doesn't sound like a good place for kids to me.
Palio - fancy Italian - I wouldn't do it with kids
Shulas - steak - again, I wouldn't do it with kids
Looking at the list, I'd choose Spoodles or Beaches and Cream