Which park will you spend the most time in with your family? It's really convenient to stay near the park where you will spend the most time.
Are you looking to get two rooms?
2 Bedroom villas are fantastic. You would also all fit in family suites at Art of Animation or All Star Music. Or you can book two, separate rooms any where on property. Are there particular resorts that interest you? Are there certain parks you will visit more than others? Do you have a budget in mind?
If you are looking at a two bedroom villa I would suggest renting DVC points. There are many 3rd party web sites that provide this service and you will probably end up saving a decent amount of money.
Two bedroom villas have a master bedroom with a king bed and a second bedroom with either two queens or one queen and one sofa or Murphy bed. The living room will have a sofa bed. Some of the 2brs have a small Murphy bed, too. The grandparents most likely would not want to sleep in the living room.