Stroll, shop, dine, see a movie, and/or play in the various fountains at Fashion Island
Spend the morning at the beach before it gets too hot and crowded. The southern peninsula between Balboa Pier and The Wedge is still a place of reduced summer crowds, but is a bit of a walk. Don't forget your beach umbrella and sun lotion. Little Corona State Beach is still a fun place to visit the tide pools with little ones.
Take one of the harbor tours, or rent your own motor or sail boat for a few hours of adventure in Newport Harbor. Book your boat ahead of time.
Narated harbor tours: http://www.funzoneboats.com
Visit the quaint shops on Balboa Island and take the ferry to the Balboa Fun Zone. Things have not changed much there since we were kids. It's still fun to take the ferry, ride the Ferris wheel, and buy some junk food down at the beach!