There's nothing quite like the Disney Magic you experience when you stay onsite.
That said, whether you stay on- or off-site depends on your trip focus. If this is definitely a Disney focused trip, then onsite is best. If you cannot afford an onsite resort, then stay very close to the parks (such as Downtown Disney or Lake Buena Vista), and accept the move off-campus as a compromise.
If you are splitting your time between Disney and any of the other Orlando theme parks (Orlando/Isle of Adventure, Sea World, etc), then off-site is probably best, but with a car. Also, if you are economizing by limiting the number of days in the parks, offsite might work.
I've stayed at a couple of offsite hotels I love -- including Marriott Orlando World Center and the Hyatt. However, neither of these were cheaper than WDW resorts. On those trips, the focus wasn't on Disney, and it worked out quite nicely. Also, I had a car rental. My all-time favorite Disney memories all include a Disney Resort.