I reckon one day in Vegas is about right - but it's a big day.
We spent 3 nights there at the end of our trip - we had a day at the Grand Canyon and a day walking "the strip" - it was great fun, but I wouldn't have wanted to spend too much more time there.
There's heaps of free things for families to see - lions in the MGM, tigers in Mirage, the fountains in front of Bellaggio ever half hours, volcano erupting in front of Mirage and every 15 minutes from 8 PM. Just seeing the sites and the lights is great fun, and the kids love eating at buffets (we ate at Bellaggio and it was woinderful). You can also pay to take a gondola ride INSIDE the Venetian, go up the Eiffel tower, see aquariums, Egyptian tombs, ride roller coasters etc.
www.cheapovegas.com has reasonable reviews of hotels, casinos, buffets, pools, free sights etc - though just bear in mind it is not aimed at families.
We stayed in Luxor, which was ok, but something a bit more central might ease the walking.
It was a fun, interesting day, and not at all scary - the only thing parents might be concerned about were the hordes of people along the strip handing out cards advertising certain ladies and their "charms". But the people doing this didn't bother us as a family only dad when he walked by himself!