Ok, I'm not going to touch gameplay until later on (because quite frankly, the vast majority of this site's audience couldn't care less). First issue is language. Yeah, they swear, it's on the box M for strong language. That said, it's nothing too bad and more importantly, nothing your kids haven't heard before if they have any interaction whatsoever with other kids.
Next is the violence. And boy is there a lot. From the satisfying explosion of a perfect headshot to the death of your character at the hands of the chainsaw wielding maniac, this game is violent. That said, it's not overly violent (like, say, Saw). The genre of the game is survival horror, and the dark element adds to the game perfectly.
This game is scary, intense, well-made, hard, and not good for anyone who scares easily. It's a fantastic game, one of my personal favorites, and by no means the worst one out there. You want really violent? Try Dead Space. (also a great game, just gorier)
Finally, the sexual content. I don't understand why everyone is getting so worked up over it. Ashley dresses in a miniskirt. The game is made in Japan. Miniskirts are normal there, and her skirt is actually quite modest by comparison (trust me, I was there)
Oh, and as for gameplay, I recommend ign*'s excellent review. It describes the game far better than I ever could.