My husband and I are considering spending a few days of our trip to Spain this summer in Valencia (late july/early august). What is there to do... or should we spend the time somewhere else?

Why Valencia? It will be very crowded with sunseekers from all over Europe and it might be very, very warm. From 16 July (la Virgen de Carmen) to early September is the most expensive time for beach holidays in Spain, especially at the Mediterranean beaches.

Have you considered Galicia, Cantabria or the Principality of Asturias? They will also be crowded but may provide a bit more relief from the heat. And there are mountains (Picos de Europa). Also, 2004 is a Jubilee year for Santiago and, if it's like 1999 there will be concerts all around Galicia.

Saraht
Valencia is a nice big city and offers lots of things to do and places to visit.
I do not agree with Ned that Valencia and I mean the city will be crowded in
July, Sunseekers will be keeping the surrounding beach resorts full but the city itself will be hot and humid and not too busy.
I fully agree that if the north of Spain, Galicia , Asturias or Cantabria fit in your plans it will be a much better July-August choice.

I've lived in Valencia for years; it is not really crowded in July. Most holiday-makers go to nearby villages, not to the city itself. Inside the city, you can divide your visit in two parts: the old city and the new one. In the old part, don't miss the Lonja, the Museo del Marqués de Dos Aguas -it's a museum, and its façade is an impressive example of barroque architecture-, the Cathedral and the Basilica -you can climb the tower, called Micalet-, and the Estación del Norte, which is the main train station, placed in a real fine modernist building. They are all very close, you can walk from one another. As for the new part, you should visit the Ciutat de les Arts i de les Ciències. It's got an impressive architecture, and includes a Science Museum, a Planetarium and Imax cinema and the biggest aquarium in Europe. Very near the city, you should really go to Alboraia and try Orxata and fartons (orxata is a cold, non-alcoholic drink hand-made locally), and you can also go to El Palmar to eat paella. At night, there's the Feria de Julio, where you can have dinner al fresco and join balls on the street. Moreover, in July there are sales, so you can find bargains, if you like shopping.
The only drawback is that it is really hot in summer, but you can always go to the beach.