Dan has a point about the kids getting impatient. Little kids, such as mine, find it a lot easier to enjoy the slow periods on the trip because you can stop a lot and everywhere you go there is a nice, new playground...
On the other hand, if you pick your spots even the Erie can be fun. Crescent Boat Club, for instance, was very nice and we swam right off the boat at the dock. Schenectady has a pool. Some of the towns have places to walk around - Fonda has the race track, St. Johnsville, Ilion and Frankfort are right on the canal so you can walk into town. And if you like fishing the canals (especially the Erie) are fantastic because of all those years when you weren't even allowed to put a line into the water. Once you get to Sylvan Beach, or even proceeding westward on Oneida Lake, there is enough to keep everyone busy. Amusements, food, some nice beaches and lots of scantily clad young women (that's for the Captain, of course [:-mischievous]) ...
But seriously, if done right and with the right frame of mind, the canal is a lot of fun. If done wrong its a miserable trip and a family disaster of "Griswold" proportions...