Several things--
It's worth going up in the Skylon to catch the view. It's actually a revolving restaurant, and while expensive, still a lot of fun.
There's a power plant (I think it's called the Robert P. Moses) on the American side that you can go through with all kinds of hands-on exhibits to explain how water power is converted to electricity.
There's a Butterfly Conservatory on the Canadian side, which is awesome. Be careful about when you go-- there are tons of school groups through on a daily basis, but you can get there early and probably be fairly safe. You could also go in the late afternoon and do okay.
The Niagara Falls Aquarium and Buffalo Zoo are old, but fun places to visit.
The Whirlpool in the Niagara River used to have a gondola that you could ride across the gorge.
There's a greenway along the river on the Canadian side that you can rent bikes for riding or just saunter along.
Old Fort Niagara is a great place to learn about some Revolutionary War History.
The waterfront in Buffalo has some naval ships and a submarine that you can tour. Very cool!
The Albright-Knox art museum has some world-class artwork and great special presentations.
ArtPark in Lewiston is the place to go for plays, ballets, etc.
To get close to the Falls, you have a couple of options. You can take the Maid of the Mist, and it will take you up fairly close, or you can right a high speed air boat which costs quite a bit more but gets you really close and wet!
That's all I can think of right now, but there are information booths everywhere. As far as hotels, etc, I recommend trying priceline.com. We've gotten very inexpensive accommodations through them, especially on the Canadian side. Bid ridiculously low! We just stayed at a Holiday Inn in Canada for $30/night for three nights, no tax because we're US people, and including Priceline's fee. If you cross the border, make sure you have everyone's birth certificates. We haven't been checked yet, but it's bound to happen someday!
Have an awesome time! Feel free to email me if you have any more questions.
Taryn