This is what I would recommend if you're visiting this attraction with kids 7 years and older.
My TIPS for a great visit with OLDER KIDS
1) Check the Centre Island ferry schedule and arrive at the ferry docks (at the foot of Bay Street) 45 minutes prior to departure, with snacks and water (and maybe chalks for them to draw on the pavement while they wait). DON'T FORGET TO NOTE THE SCHEDULE FOR YOUR RIDE BACK!
2) If your family has the inclination, bring everyone's bike, with locks. There are no cars on Toronto Islands! It's cyclists haven! Then, it doesn't matter on which ferry you hop on.
3) Try to catch the Lagoon Theatre play on your way in or out of your visit to Centre Island. (Their 30-min. play is great for 3-12 years old with double-entendre for the adults (2013 update: performed by Frolick Wednesday to Sunday at 11:15, 12:15, 1:15 and 2:20 until September 2); with potential shows later on the weekends. Bring cash, its pay-what-you-can, suggested admission price of $10 but they're cool about it.)
4) Walk straight to the other end of Centre Island, past the fountains, and turn right to reach Gibraltar Beach (skip busy centre Island Beach). You'll find many beach entrances walking 10-15 minutes along the paved path. The sand is fantastic! There are less people. It feels like the ocean.
5) At the end of the day, you must check the weird contraption of the Synthecycletron by Barry Prophet, an interactive machine generating noise as you ride it. it is part of the New Adventures in Sound Art. You'll find it on your left if you walk east, past the bike rental place near Centre Island Beach.
Note that the Carousel Café by the large bridge is pretty, with a large patio overlooking the canal, and it offers a vast menu, not too expensive (I'd make two kids share a club sandwich).
When my companions walked by the hilarious large character by the entrance of the Lagoon Theatre, he called them: "Come closer! I want to smell your conditioner!"
Also read 8 TIPS: Toronto Islands with teenagers