We have a 4 yr old and we like Daytona. The in-laws live in St. Augustine, so we've done lots of day trips there doing different things.
You could spend a day swimming and playing in the sand, and once we even got a cheap hotel room just for the day so that we could use the pool, have somewhere to change, shower and park. The Ocean Deck is a great restaurant just south of the pier that you can walk up to from the beach. (Don't forget to bring a cheap kite, and I've never seen nice shells there, so I don't know how much shell collecting you can do.)
You could take a trolley boat or a manatee or dolphin cruise which we haven't done yet, plan to during our next trip in January so I can let you know about that.
You could just walk around on the boardwalk, have lunch, play in the cheesey arcades, ride go-karts and have lunch at Bubba Gumps or shop and eat at one of the Ocean Walk Village restaurants. There is a whole strand of beach shops and restaurants across the street from beach. They also have parasailing on the beach and those bungie type rides on the boardwalk.
If you sign up for the free travel guide on daytonabeach.com you'll also receive a little coupon book good for some free appetizers at restaurants, a couple of bucks off alot of the attractions, etc.
Hope this helps. Let me know if you have any questions.
Here's a thread with some restaurant recommendations
http://www.disboards.com/showthread.php?s=&threadid=642639&highlight=+DAYTONA++BEACH