My parents are taking my two daughters ages 4 & 7 to Niagra Falls this summer. They are driving from the NYC metro area and wanted suggestions on places to stop along the way in order to break up the trip. My mom thought of Howe Caverns, does anyone else have any suggestions? Thanks for your help!

I'd suggest the Genesee Country Museum over Howe Caverns.

http://www.gcv.org/

^ That route could also include a visit to the Corning Glass Museum where they can watch a live demonstration of glass blowing.

http://www.cmog.org/default.asp

Depending on the route they choose, they might like to stop in the Finger Lakes region, particularly Skaneateles. Or if the come along the southern tier (Corning) they could stop at Chautauqua or Peek n Peak.

I also forgot to mention that my sister took her kids to Niagara Falls and they stayed at that Great Wolf Lodge and had a BLAST. It's not cheap, but she said it was really a first class operation - really clean, etc.

http://www.greatwolf.com/Locations/Niagara/

Corning Glass might be a great stop. Its about 1/2 way (less if you're coming from north of NYC, more if from L.I.) and it would be fun for both GP and the kids. Genesee Musuem is great also, but you're only about 1 to 1 1/2 hours away from the falls.
If you are planning on entering Canada (and of course, re-entering the US), know that you now must have passport or photo ID plus original birth certificates. Also I would suggest a notarized staement from both parents authorizing GP to be traveling with the GC. Actually, if you will be entering Canada, I would go to the US customs and immigration web site to make sure you have proper documentation for traveling with grandkids.
Great Wolf Lodge is terrific but it is a little further from the tourist area of Niagara Falls. You would have to drive to the falls versus walking.
Be sure to go to the Butterfly COnservatory in NF, Canada. Its a lot of fun. And wear colorful clothes to attract the butterflies.

In addition to the Corning Glass Museum mentioned above, Big Flats (Harris Hill), New York, is the soaring capital of the world. The two towns are about ten minutes apart. I live in the area and really enjoyed my glider ride.

Definitely stop at the Corning Glass Works - you can watch someone blow glass - really cool !

I agree with the suggestion of Corning. It's only 4 hours from NYC and the glass museum would be fun for all. Not far from the museum is Market Street, where you'll find antique shops, restaurants, and other businesses. (The kids might like the old fashioned ice cream parlor, Old World Cafe.)
If you're staying the night, I'd suggest the Radisson hotel. The prices are reasonable and it is located at one end of Market Street, making it easy to just walk out of the hotel and stroll around.

ek, Do you live in the Corning area? I do. I live in HH.