I can't remember if my brother or SIL was actually stationed at Eglin (dual military - one was there, and the other was somewhere else), but they lived in Niceville with their two young daughters for awhile. I can't comment on schools or anything like that, but I know they enjoyed all of the outdoorsy activities down there (fishing, swimming, etc.).
We'll be moving to Eglin early next year. We are currently looking for housing in Niceville and have heard that the schools are pretty good in that area (we have a 1 year old so school isn't top priority right now as we're going to rent). We'll be moving from the St. Louis area am and very excited about FL!
Niceville schools are pretty good. For younger kids, Liza Jackson is really good...they are private, but free. There are other good ones too, that's just what comes to mind.
For living, Destin is the beach/tourist town...lots of condos on the water, and lots of traffic during the warm months. But it's beautiful. Shalimar/Fort Walton Beach are just west of Eglin, and have a mix of nicer and not as nice houses, amenities, and good proximity to base/beach. Just east of base is Valparaiso/Niceville. If you are looking in Niceville, Bluewater Bay is a nice area. You'll get plenty of amenities on the Niceville side as well, but not as much as on the west side of base, and you'll have to go over a toll brigde to get to the beach/mall/etc. Crestview is to the north, and will give you a longer commute to Eglin and to the beach, but you will get a LOT more bang for your buck on housing. But there is not much to do there.
Some people live in Navarre too (more beach), which is nice, but the commute is horrible. I don't recommend it unless you are working at Hurlburt rather than Eglin.