Hey just saw your update. Sorry you aren't going in '07 but waiting might be good. We waited until we knew DD2 was old enough not to try to pull away and run off. It's very dangerous if you leave the boardwalks.
Here's a link to my favorite pictures of our trip. I think you have to register but it's fast and free.
http://www.snapfish.com/share/p=481221140660641195/l=83174330/otsc=SYE/otsi=SALB
Best things we did:
Raft trip in the Tetons, a scenic float. The kids loved it, we saw tons of wildlife, and there was a bit of whitewater, enough to make them feel like they'd been "rafting"
Ranger-led hike in Yellowstone - An exsperienced ranger took us out into the backcountry, away from the crowds, where there are no boardwalks or barriers. We told the girls to step where she stepped and not to stray off the trail (she told everyone in our group this before we started, btw, but we told them in advance) Seeing the thermal features up close without barriers was amazing!
The Junior Ranger Program - both girls loved it, and learned a lot without realizing it

We did it in both parks.
Also, the restaurants in the park hotels are pretty good. We made reservations for dinner at the one in Old Faithful Inn 12 months ahead. (and boy were we glad. Walk ups were waiting 3+ hours!). We ate lunch at the one in Mammoth and found the kids got a little booklet where you could collect a stamp at each area (Mammoth, Canyon, Old Faithful, Roosevelt, Yellowstone Lake, and Grant) and if you got 5 of the 6 stamps, you got a prize. We were lucky to get the book early enough in the trip that we did this easily and the prize was a very nice stuffed animal, a black bear. Also two free ice cream sundaes in any of the restaurants. Cool!
Mainly we ate sandwiches and such. We took a cooler and bought sandwich stuff. It was nice to have food and water in the car. Some of the geyser basins are pretty far from anything and kids are hungry when they're hungry. Also, ALWAYS have water with you. You can easliy get dehydrated in the hot windy geyser basins even on a cool day.
We had planned to go in June, but changed to July because some things were not open yet in June due to the weather. We were warned of crowds, but did not think they were bad at all (unless you wanted to eat dinner in the hotel restaurant and didn't have reservations

. Btw, all the areas also had cafeterias and sandwich shops which were quite satisfactory. No gastronomical wonders, but decent food. Oooh, do not miss the huckleberry ice cream. It's purple and wonderful.

There are also many huckleberry foodstuffs available to purchase and take home, but the ice cream is a must-do while you're there
Laurie