Washington Street is a 3 block stretch of independently owned shops and restaurants. It is closed to vehicles making it a great place to stroll leisurely while browsing or picking up some local taffy or mementos. During the summer you may be able to take in some live music at the band stand.
Washington Street mall is a pedestrian only cobblestone walking area. It's interesting in that there are quaint stores to shop and browse. There are ice cream shops, fudge shops, jewelry and local trinkets, and other cute shops.
Take note that the strollers may get a little bumpy, but maybe that will be good to put the kids to nap.
Parking may be a little difficult to find in the summertime. You won't need to spend the whole day there.
Overall, a worthy part of your Cape May vacation.