It's not so much WHAT you do as the fact you do something productive with your time. First, it's fine to take vacation -- don't feel you have to be occupied every single minute. You need to decompress, spend time with your friends and family, etc. Second, find something that you enjoy (vs. what "looks good"). You can work (for money) which develops all sorts of skills. You can volunteer at an organization about which you are passionate. You can participate in camps -- sports and otherwise -- or be a camp counselor. You can learn a language or skill (i.e., become a PADI certified scuba diver). You can play in a summer sports league or complete your Eagle Scout/Gold Award project. There is a world of possibilities out there -- if you find something you enjoy, your summer will be that much more pleasurable.
What doesn't go over well is: "I worked on my college applications all summer." No one will believe you spent 40 hours a week for 8+ weeks working on applications and instead will assume you basically bummed around all summer doing nothing.
