Is it definately Euros now? I heard that cypriot was still in use
Yep, Cyprus is now in the Eurozone, and pretty much everywhere is now only taking the euro. If you still have Cy£ knocking around, all the banks will exchange them at a standard commission free rate.
I would suspect that you really don't want to go the the Aki strip. For one thing it will probably be a 40min drive at least. There is a decent Italian and the local food in Sylvanas is good with a decent view over the salt lake to Limassol when sat outside. Apart from that I wouldn’t bother. The Aki Arms is a hole and not a place to go as a family.
As for restaurants in Paphos, if I'm honest most of them I have been to are OK, but none have really stood out as being one that 'we must go back to'. The only two I would recommend are on the Tomb of the Kings road and only about 200m away from each other.
Fat Mamas which gets packed early (you can’t book) and does the usual steaks, pasta and pizzas which is good, but the entertainment from the staff is what makes it. The other is Zorbas and as the name suggests is mostly local food. Good food at a good price served by a traditional surely waiter.
Have a good holiday
(Sorry, and in answer to your last question, prices have rocketed. Not necessarily since the Euro, but since I was last here. This is not the cheap 'holiday tour' it used to be.)
Then again, it isn't p1ssing down UK either