i have travelled extensively with my family to San Diego which includes 3 under the age of 5. The hotel del is nice and is beachfront. However, you will find that the rooms are very, very small. Many are 200-350 sq ft which is NOT ideal for a family. If you have decided that Coronado is your location, I would recommend the new beach village part of the hotel. They will give you much more space and have full kitchens, etc. Try to reserve quickly because there are not a lot of them and they tend to fill fast. You did say that money is no object which is good because they will run you 800-1000 per night.
There are other beach options with families:
1) Someone mentioned pacific beach. It has more of a college crowd. Pacific Terrace frequently gets very high marks on trip advisor. Tower 23 is another good beach option. Research pacific beach to see if it is right for your family.
2) L-auberge del mar (in Del Mar) is another good option. It is beachfront. However, it is undergoing renovations in to the summer (i dont know when you are travelling).
3) If you are willing to be in Dana Point, the ritz carlton laguna niguel is a fabulous beachfront property.
Other great properties off the beach
1) I think that the rancho santa fe in rancho valencia is the number one property in san diego. Rooms are 700-1100 square feet providing plenty of space for your family. There is a nice pool, worldclass tennis, and a spa. You would however need to drive to the beach. They have a 3 bedroom hacienda which is a 5000 sq ft area with a private pool (totally awesome). It will however run you 3000-5000 per night.
2) Four seasons Aviara in Carlsbad is another great property. It is actually only 10 minutes from the beach. There is a shuttle which runs to the beach from 7am-5pm. Absolutely gorgeous property with a lot of kids programs.
3) Finally there are many good options in La Jolla. The three that stand out are the LaValencia, Hotel Parisi, and Grande Colonial. LaValencia is the most well known, but the rooms are outdated and small. The pool is awesome. Hotel Parisi has Parisi apartments for families. You can request number 35 and 36 which would give you about 2500 sq ft for about 700 per night (i think that this is a steal). Full kitchen, large balconies and flat screen TVs. You would be located in a great part of town. Bad points would be that there is no pool or restaurant (even though the hotel will deliver from any restaurant that you choose. The Grande Colonial is expanded its villas which are very nice and many have oceanfront views.
4) Downtown, I would recommend the Westgate, W, or US Grant.
5) Grand del mar is a new hotel in del mar. I have not had the pleasure of staying their but the pictures on the website look very nice.
My family and I travel to SanDiego/LA/orange county 4-5 times per year (we are actually going for Memorial Day). I will retire in southern california one day. I just want to make sure that I have enough money so that I dont have to work in that paradise. I have stayed in all of these places. I would really rank the hotel del in the middle of the pack. If it is very important for you to be on the beach, I would consider it especially if I could get into the beach cottages. PM me if you have further questions.