LakeRacer - Those aren't just lucky kids, they are future boaters.
Hopefully all our kids will be future boaters. We have to get them started and make it fun for them so they'll stick with it. Heck, we look at our kids as our future designated drivers!
We got our kids started young (see Bill272's post). It was tough for me (the mom) because the caretaking fell on me while the driving the boat part fell on him. It helped to take along an extra adult to handle the lines and fenders (my old job). If the kids are going to be swimming, use the swim diapers. The regular ones take on too much water and end up weighing more than the kid. Keep them hydrated and out of the sun if they're too young for sunscreen. You can't have too many hats, bandanas or kid-sized sunglasses on the boat.
Now our kids are 5.5 and 8. They swim (with PFD's), fly a kite off the back of the boat, play in the sand, look for "treasure", throw a frisbee or football and generally goof around. The really good "get them tired out" activity is where they jump off the swim platform, climb up the ladder and jump off again. They can do that 20, 30 times in a row.
Enjoy and take lots of pictures. You won't regret it.