We booked free dining the first year it was offered -2005. It was very, very affordable for our family of 4 (2a, 1c, 1 baby)... total was $1900 for an 8d/7n all inclusive. That included the regular
DDP at values with appetizers and tips. That price also included airfare that year.
The next year we started pricing out vacations, and couldn't come even close to the value Disney gave us the prior year. We didn't necessarily plan to go back every year, but for the quality and value, we booked again free dining in 2006. However, my DH wanted nicer accommodations, so we upgraded to a moderate resort. This went on for years... every year looking into other vacations and deciding that for the price, we'd rather go back to Disney.
We have gone on 6 trips since 2005 - all ranging from 8 to 11 days in length, never returning to the value resorts after that first year. We always travel the last week of August through Labor Day...my DH can get that week off every year, and we've found that it's a great week to go - low crowds, great discounts, and late park hours. Basically, you get the perks of high season without the cost and crowds. Free dining worked for Disney in the case of our family, because we probably would have branched out and done different trips if not for it. They really made a lot of $$ off us over the years.