Too much to do in NYC to name. If you're an art lover, there's a ton of museums. Around 10th avenue between 18 and 25th streets, there are small galleries with some neat stuff (and a lot of crap.) There's the Metropolitan Museum of Art, which I think everyone should go to at least once. There's the Museum of Modern Art, which I also think everyone should go to at least once. The Guggenheim is pretty cool to see, even if you don't go in.
There's the typical tourist things like going up to the Empire State Building (I recommend going at night, but be prepared to wait in line.) Statue of Liberty, (again, lines.) Central Park has a nice little zoo. Broadway is good for musicals and big-name productions, but real theater is 'off-Broadway.' Walking around Chinatown and Little Italy is fun, plus there's a lot of good food. Someone mentioned the Natural History Museum, which is fantastic. Their Planetarium is really awesome, and they usually have a good IMAX movie playing. (some of this can get pricey, though)
Newark Airport is in New Jersey, but they have local trains running into Manhattan. Getting off at Penn Station gets you in a good area to explore.
Smaller boutique hotels are really great, but can get really expensive. ($300+ a night) There's a cheap hotel at 6th and 23rd my friends/family stays at to visit me, and they've never had problems with it, other than it being kind of bland. But at $100-150 a night, can't complain.
I also know a couple good restaurants around if you're curious.
Oh, and the water isn't that
bad. It's not like it comes straight from the East River.