Couple tips:
We stayed at this Hilton on W 35th and absolutely loved the location. Very convenient to everything. It was very clean and inexpensive-I highly recommend.
http://maps.google.com/maps?rls=com.microsoft:en-US:IE-Se...
Take a double decker bus tour. At first I thought no way-but it was the BEST way to see NYC with little kids. You could get on and off anywhere and there was always another one to come along when you were ready to leave. The driver gives you all the scoop on everything as you go so you really learn about the different parts of the city. The empire state building tour and the statue ferry were inlcuded in our fare too. If you stay where I suggested the Empire St Bldg is a couple blocks away -I suggest getting there first thing, do the bldg tour and then get on the bus.
Go to the big Toys r us at Times Square-the kids loved it!
Check out Dylans Candy bar (owned by Dylan Lauren-Ralph's daughter) and make sure to visit the ice cream shop there. Very out of the ordinary offerings and SO good!
If your boys are into Harry Potter there is a travelling exhibit in Times Sq that is supposed to be very cool. I am actually trying to get up there with my son b/c it leaves the country in Sept.
Go to Central PArk and then hit FAO shwartz. I would skip the Central Park Zoo though-unless you have a reciprocation with a home zoo membership. My boys were so bummed it wasn't like they portrayed it in that movie-forget the name now.
As far as restaurants that is where we struggled. We wasted quite a bit of money on them at the restaurants that DH and I wanted to go to. They turn their nose up at anything that looks a bit different. I would advise researching by what your budget looks like and what the kids like to eat.