We are two families, total of 8 adults. Should we rent a home in Crete or Santorini?

Other than revealing how many people in your party, you have not offererd one detail that would allow anyone to help you. the more information you offer the better the advice will be.

We want to relax, but we would love some beach time, visits to ancient sites, restaurants and perhaps a bit of nightlife options. I've heard from some people that Santorini is very touristy. One of our favorite vacations was to Barcelona and Sitges, Spain. That does not give you much to go on, but perhaps you have a better picture. Our group ranges in age from 20-68.

Why have you narrowed your choices to Santorini and Crete?

Because we've read of their beauty, variety of activities and beautiful beaches.

Well Santorini has stunning views but the beaches are very hot pumice pebbles so I would not describe those beaches as beautiful.
I would suggest that Crete can hit all of your hot buttons as it has beautiful beaches and historical sites. You have not told us when you are planning on visiting, if you want a city location near a beach or a beach location near a city, nor how long you are planning to visit. Crete is very large and in 19 days we still have not seen everything we would like to visit in Western Crete alone.
Anyway here are some pictures of Western Crete which may be helpful.
http://travel.webshots.com/album/559...PIlVxI?start=0