OK, not much info.
Croatia has many seaside towns, and was the "riviera" of the Communist world. It's tourist-oriented. When you say "small villages", you probably don't want "small" in Croatia. The smallest I would go to would be Sibenik/Trogir/Zadar, all of which are midsize cities in Croatian terms. I've never been to the Istrian peninsula, so have no comments about those town (Pula, Rovinj).
Most places do not have sand beaches. Most are pebble or stone. In Split, there is a fine sand beach. Split has many nice restaurants. It's easy to walk around, not hilly. Depending on when you are going (high, shoulder, off-season), costs will vary. You can easily find a tourist apartment in Split for 6. We stayed in one for 5 for about E125/night (in 2011 - costs may have risen).
Dubrovnik has nice places to stay. It's very popular. I would not go there in June-September. Cavtat (a short boat ride away) has a nice sand beach. You could also stay in Cavtat, and take the boat to Dubrovnik. Really depends on your interests, of which you have said little. My wife and I are also in our 60s. We like Dubrovnik, but the sobes (vacation apartments) can be many hundreds of steps (300-400) from the main street in the middle of the old town. Some old knees can do it. Some can't.
It's also unclear how long you want to stay. I think Dubrovnik is a 3 night place, Split 4-5 nights. There is also Zagreb, in the interior.