We just got back from 8 days up that way. We camped at Haviland Lake when passing through Durango. We then towed our big 5th wheel over the passes and spend 4 days in Ouray. Swimming at the town hot springs pool would be fun for the kids, though it is kinda expensive. They have a big slide and water obstacle course stuff that kids the same age as yours looked to be having a blast on. The drive into Ouray is also pretty amazing
Telluride is a big longer to get to, but it is awesome as well. I wish we would have been able to stay there a little longer. You could get lucky and get a spot at the town campground there, but its first come first serve and wouldn't be worth the risk of not getting a spot. You would want to spend at least a night there, preferably 2, but staying anywhere other then the campground is going to be expensive....like everything else there. Nonetheless VERY cool town with alot of outdoor stuff to do.
Steamworks Brewing in Durango is very popular, but pretty decent pizza and beer. It's bigger then it looks, so don't let the line outside turn you off.
