Clearwater beach is very nice, great sand, nice atmosphere. It can however get a bit crowded (its the beach all the tourists have heard of) and if you do go, DO NOT attempt to eat anything on the beach or you will be visited by some very hungry seagulls who will snatch your food with no regret.
We prefer some of the other beaches which are fairly near to Clearwater, our favorite is Treasure Island. It is much quieter and a great place for shell finding. And between it and Redington Beach is Johns Pass which has great shopping, food, and various "cruises" which last several hours (Dolphin Cruise, Pirate Cruise, Shell Cruise, etc.).
As others have mentioned, there are a lot of other great places in Florida to go. Gatorland is great for young kids - we took DS when he was 2 and he absolutely loved it (and I will admit, so did I, I just love those gators!) Busch Gardens is a lot of fun with plenty of things for young children. My son actually has always loved Universal Studios and Islands of Adventure (he is 3), so they can be fun for young children - there are a lot of child oriented things there - Barney show/play area, Animal Planet show, Dr Suess land, Curious George water area, etc. There are a lot of "smaller" things to do too. I am most familiar with Tampa because I live here, but there are some great lesser known things such as the Museum of Science and Industry (MOSI), the Florida Aquarium, and the Lowry Park Zoo (voted #1 family zoo in the country by a major parenting magazine).