The term staycation hasn't been with us for more than a couple of years and in the current financial crisis people and families are torn between needing to get away for a while and managing their budgets. The objective of a staycation is to take what your immediate area has to offer and do what you want to do. Needing to relax is more important than ever, your decisions are more important and you need to be able to focus and think rationally and that only happens in minds that are not over worked or stressed out.
So you need some time away, but don't have the cash to go anywhere. Whether its just you or the whole family, start with blocking out some time by scheduling vacation days with work; now you are committed. The next step is to find out what each person you are traveling with would enjoy doing during some of that time. Lastly, research the options in your area and don't let the word research scare you. This is going to be a fun project and if your kids are old enough they can research the activity that they have chosen. You'll want to know what the hours of operation are, the cost, supplies needed, any restrictions (like are strollers allowed) and plan each day accordingly.
If the children have drastically different preferences for activities or choose expensive activities, then it may make a lot of sense to divide and conquer. The kids are happy doing what they enjoy, you get to enjoy some "quality time" with one of your children when they are their best. The other idea is to set a limit as to how much a child's activity can cost. If one child's activity is cheaper, then their day may get to include dinner at their favorite restaurant, a stop at the ice cream stand on the way home or even a new fishing pole to take to the lake that day.
The cost will be so dramatically less expensive then traveling somewhere, that you can probably have an expensive date night at a nice restaurant, go to a play, stay in a local hotel with a pool for the kids, go to a local amusement park or have one overnight trip with the rest of the time spent locally.
If you are the type of person that never sits still, then you won't have a problem thinking of things to do and will have a great time. If you are the type that can spend an entire weekend on the couch, then the biggest risk associated with staycations is treating it like it's a weekend and never getting off the couch or running errands and doing housework, so you end up not doing anything fun. That's why I think planning a staycation is important for these people, because it's easier to follow through when you have plans.
One last piece of advise to consider is about those you enjoy spending time with and have fun with them. If that means dinner with the next door neighbors or seeing family, then great; but this isn't a holiday, so you don't have to go see family if you don't want to. I've found that it doesn't matter what I'm doing, if I'm around people I enjoy, I'm always having fun.