Just went to DS with my 3year old. We went there, went to
Lego Store, Earl of Sandwich then Once Upon a Toy. This was around 5-ish pm. My opinion based upon my easy-going 3year old:
Do O'hana. Skip DS. Sure, there are lots of things there. But we had to forcibly carry our kiddo out of the store kicking and screaming. And he's a sweet kid, really. Parking was really tough, (we drove) and we had to walk from that huge parking structure by Cirque to the more interesting kid-zones at Market place while battling through loud music and teens/couples/adults who were trying to get to their resturants and shops. You can't take a stroller into a shop, really, and trying to take a 3 year old into a toy shop is like taking a chocolate addict through a Godiva shop!
Go to O'Hana. Not only is the food fun, but there are characters, parking is decent, the whole hotel has a nice vibe to it, and I think you can still chill on the beach to watch the fireworks and the Water padgent. You can also take the monorail around the hotels, which is just fun in general to a three year old. There are pretty shops with neat Disney diningware and tiki stuff (which you can find at DS, mind you), and you could just walk around the grounds of the hotels or go and get yourself a dole whip at the bar. And they serve Kona coffee! It would just be SO MUCH simpler, and we should have done it. DS, while nice, is too incomplete for me right now, plus it's too much like CityWalk at Universal to justify taking a toddler to it that late in the evening. We learned from our mistake - just too much stimulation for our honestly well behaved toddler. He had a major meltdown being there. He did not have a meltdown when we went to Kona (after the kids races at the Wine and Dine this weekend).
Best thing we did today with little man: we went to Fort Wilderness and he rode a pony! $8.00 for a little ride (you lead the pony) and he LOVED it! Well behaved little ponies, and such fun for our little guy. Cinderella's ponies are also at the little track too, so you can say hi to them!