Jonathan,
I don’t think the price increase is because of the Neptune Fest. The “sniper trials” are being held in the VA Beach area this fall. Prices on all hotels are increased and some are requiring 30-90 day min. stays in anticipation of the media blitz.
Yay for capitalism.
I’m hoping to go to Assateaguefor one day when I go to Ocean City week after next.
I did check the prices. They go from fine on Thursday ($90-$140 per night) to insane for Friday and Saturday ($250+ per night) then back to normal afterwards.
My heart!
I don’t think our VAB hoteliers would ever not be accused of gouging. 
Anothe vote for Cape May, New Jersey. I just got back from my annual week there, and I love it. Fun stuff for kids includes the Cape May County Zoo (very small and funky, but a lot of fun). Walking around town grokking on Victoriana is expected (or you can take a horse-drawn carraige tour); the beaches are nice; there are several good miniature golf courses. You can go down to Sunset Beach and look for Cape May diamonds (tiny clear pebbles). Very family-friendly town.