I just posted a thread specific to road biking, but we rented cruiser bikes and kids bikes and rode as a family too. We were staying on the third street north of the SS/Duck boundary, so about a mile from shops in central Duck (Scarborough Faire, etc). The family riding was generally quite good. The sidepath has some very short hills, but is generally flat. The part that was a bit stressful with small kids is the section in central Duck where the sidepath ends and the bike path is simply a wider shoulder on NC12. This starts in front of Aqua, and I can't remember where the sidepath resumes. We have a 5 and 7 year old, so this part was a bit unnerving, but older kids should be fine. Heading south, the sidepath goes all the way through SS, though at one point in does cross from the east side of the highway to the west.
We rented bikes through Kitty Hawk Bikes. They were a great business to work with...they dropped off and picked up all four bikes. You can easily see prices on their website.