Hi - I live in Northern Virginia (near Dulles) and have a house in Rehoboth. My husband and I have actually just finished writing an iPhone app called "Rehoboth In My Pocket" - a travel guide to Rehoboth. So, I'm kind of partial to Rehoboth ;-) I would absolutely go. It's got a small town feel, very walkable, with lots of big trees, cottages, some nice parks, and dozens and dozens of restaurants. Be sure to stay downtown, not on Route 1, so you can just park and walk everywhere. It's hard to pick a favorite restaurant, but my favorite may be Nage (which is actually on Route 1, unfortunately, but a fanstastic little place with ever-changing menu). Also top notch are Pig & Fish (outstanding everything, reasonable prices), Hobos (local, green, organic, lots of veggie choices), Eden (romantic, expensive), and Blue Moon - plus so many others...Planet X in an old cottage with porch seating, Cultured Pearl (which has fish ponds running the length of their very dramatic roof-top terrace), Porcini House Bistro's very inventive menu and tree-top seating...
I'm happy to provide any other info needed. Oh, the best fish & chips are at Go Fish!, a little British-themed place just 1/2 block from the boardwalk - owned by an ACTUAL Brit who ACTUALLY knows what fish & chips should taste like ;-)
Here's a link to our website - in the SWAG section we have some freebie and discount offers from Rehoboth merchants that you might like also. www.RehobothInMyPocket.com
Have a great visit.