Any suggestions for a week long New England vacation in August? Looking for a quiet, water-front (ocean or lake) location. Thinking Maine, New Hampshire, or Vermont, but any suggestions on towns or resorts welcome! Would like to stay away from Cape Cod and completely congested, over-crowded areas. By the way, it's me, my hubby, and our baby daughter (9 months). So family-friendly places are a plus! Just want to relax by the water, maybe do some shopping. Thanks for any suggestions!!

Portsmouth, NH is great. You are close to Maine and the Kittery outlets.

Sebago Lake ME has a nice campground/ resort called Camp Sebago (I think)
The place is very family friendly and they rent some nice units.

Thanks so much for the suggestions! I will start researching them now!

For families I always recommend the Spar Hawk Inn in Ogunquit. Fun shopping, excellent restaurants, nice pool, water views, tidepooling for kids (well, not nine-month-olds!) and beach nearby. The only non-match for your vacation is that is hopping and rather congested.
If you want something more serence, look into the Black Point Inn at Prout's Neck, Scarborough, Maine, outside Portland. Absolutely gorgeous property, but not sure how kid-friendly.
Just thought of something else that might be just right for you! Goose Rocks Beach of Kennebunkport is the most wonderful beach for kids, and it's usually not too crowded. Plus you're a few miles away from downtown with all the shops and restaurants. There are a few hotels there, such as the Tides Inn-by-the-Sea.
Have sun researching!

Westerly (Watch Hill) in Rhode Island is an option. The beaches are some of the nicest around. In addition, it's less than an hour drive to Mystic, CT, Newport or Providence so day-trips are convenient.