You definitely can’t do justice to Crete in a week….and sadly, I would skip Mykonos just because it’s so over-run with the partying crowd. Santorini has astounding beauty, significant archeological digs, villages, and beaches, but for the day or two that you could stay, the airfare and accommodation would be exorbitant. Generally speaking, a week will not give you a lot of time to island-hop, even by plane. You have to consider the time needed to get back to Athens before your international flight.
I would agree with all of the suggestions above - focus on Athens for the museums previously mentioned (depending on your boys’ interest….the Hellenic Motor Museum is also fantastic) historic sites, churches, and outdoor cafe life in the various plateia. The Athens Riviera (from Palio Faliro - Sounion) has a good selection of beaches, cultural and recreational parks etc. We prefer to stay in the city, but the beaches are easily accessible by tram or taxi for a day trip.
In addition to Hydra, a shorter hydrofoil/ferry boat ride will take you to the island of Aegina, where many Greek people escape the summer heat of the city and where you’ll find markets, horse-drawn buggy rides, waterfront cafes, beaches, a museum, and the beautiful Temple of Aphaia.
At 8 years old, our daughter never forgot her first trip to Greece. I think it’s wonderful that you are taking your boys!