If the kids are up to it go on a guided walking tour of central London.
There are loads to choose from, and they will show you the real, hidden London.
The guides are usually 'resting' actors, who also know their subject really well.
A very entertaining 2 hours or so, for not much dosh.
Have a look at the London Walks website
As for watch heaven, as many others have said before, you cannot beat the watch room at Harrods.
(BTW avoid Oxford Street like the plague)