I've stayed in The Carousel more times than I can count. My honest opinion is that it is too expensive for an aging hotel. The condos up top are extremely nice (but $$$--on the order of $2k/week in peak season) and I actually prefer it's location up north as opposed to the riff raff down south near or on the boardwalk. There are mostly families in the 100 streets and above and the beach is not like an ashtray, and usually has more room.
Obviously, all of Ocean City is expensive, but The Carousel is something like $250 for a 1 bedroom type room and I would best rate it's accommodations at 2 stars. The lobby is nice, and the indoor/outdoor pools are good (the tiki bar food is actually pretty good), but the rooms aren't great. Also, the elevator situation is a nightmare in the morning/afternoon. Expect to wait 15 minutes for an elevator on many occasions if you don't get a room that overlooks the atrium/ice rink.
We now rent condos from private owners that are in the $150/night range. Although these are two star accommodations at best as well and only have an outdoor pool, they are larger (2+ bedrooms) and better bang for your buck. There are various sites on the net that you can find these condos for rent.