On the way in to Yosemite Valley (from the south) you drive through tall pine forests, a fun tunnel (check out Tunnel View Lookout), and past some incredible vistas. Once in the valley, the steep rock cliff faces soar above you. The sheer heights around you are wondrous to take in. Sunny meadows alternate with pine forests, and trails take you past boulders up to waterfalls. Vernal Falls is one of the loveliest hikes, where the water spraying off the falls makes rainbows beside you. In early summer the falls are at their best. In August they dry out, sometimes all the way. Don't swim at Vernal Falls or stand near the flow of water- people have died here, including children. You can have a lovely swim instead in the river at Sentinel Beach Picnic Area or in the Wawona River, a 45 minute drive from the valley (a wonderful swim!). A short (ten-minute), easy hike to a view of a waterfall is the Bridalveil Falls walk, which you pass as you enter the valley from the south. Even better is the Lower Yosemite Falls hike, a 30-minute loop hike on an easy walkway with amazing views of the falls. 

While you're in the valley, take some time to visit the Yosemite Valley Visitor Center. It's a fantastic museum that explains how the granite all around you was formed by a volcano and then carved out by glaciers. There are exhibits about the history of Yosemite and the people that have made their mark here. A video in a beautiful theater relaxs you and shows you Yosemite all through the year.
Yosemite Valley, including Curry Village, are much hotter during the day than areas near the edge of the park (in August the heat can be very unpleasant). If you come in late summer, I suggest staying out of the valley in Wawona or Fish Camp. Curry Village has tent cabins made of canvas. You must walk far to use communal bathrooms. It is definitely not comfortable and the beds are like a slab of ice (the valley really cools down at night). We skipped Curry Village this year and stayed at a vacation rental in Fish Camp which was a great option, though more expensive. 
Make sure you grab a map from the ranger when you enter because the valley is really confusing to navigate around (the signs don't tell you much). Also, bring walkie talkies to communicate between cars if you're traveling with a group because there is no cell phone coverage in the valley, or try to all travel together in a large SUV.
A lovely place to have a drink is on the outdoor patio at Majestic Yosemite Hotel Bar. The views of the Royal Arches rock formations looming up behind the hotel are incredibly inspiring. After lunch, you can walk across the meadow under the shade of strands of trees and enjoy the views. Unfortunately the last time I ate there, there were squirrels running around the dining area and into the kitchen- there were no doors keeping them outside- squirrels can carry plague, so I'd stick to drinks and skip on food at this restaurant.
A better place to eat is Village Grill, behind Village Store. The black bean burgers and sweet potato fries are delicious, and there are picnic tables with umbrellas outside where you can sit.
Traffic gets worse, parking spaces fill up, and the weather gets dusty and hot as the day goes on (in summer) so come early in the day. Yosemite is too hot and crowded in the summer- come the weeks before (for good waterfalls) or after the school vacation if you can.
While in Yosemite, definitely drive up to Glacier Point for a view of the entire valley, Half Dome, El Capitan, and all three waterfalls. You can see giant trees at Mariposa Grove, though it's quite dusty and some of the trees have burned. Oakhurst, a town 1.5 hours south of Yosemite Village, is a good place to have dinner and enjoy some cell phone reception. Eat at Old Mexico Taqueria. The interior is a humble diner but the food is delicious!! While in Yosemite, eat at Tenaya Lodge's Sierra Restaurant in the town of Fish Camp (one hour south of Yosemite Village) on their gorgeous patio surrounded by mountains layered in pines, beside an open fire pit. Prices are expensive but the food is good.

Directions

Highway 41 leads into Yosemite Valley. There are some tricky turns so make sure you get a map from the ranger when you pay.
Entrance fee is $35 (valid for seven days)- you pay the ranger as you enter the national park boundaries.
Majestic Yosemite Hotel Bar, 1 Ahwahnee Drive, Yosemite Village, CA 95389, call (209) 372-1407.
Tenaya Lodge Sierra Restaurant, 1122 California 41, Fish Camp, CA 93623, call (559) 683-6555.
Old Mexico Taqueria, 40083 California 41, Oakhurst, CA 93644, call (559) 683-2777.

Click on map for interactive view