DH and I stayed there in Jan. '06 for 3 nights. We thought it was a great hotel - a little older, but the rooms were clean and spacious, and there are lots of special little Disney touches everywhere. The rooms had Mickey hands holding up the sconces in the bathroom and character wallpaper, armoire with a DL map on it, bedding and artwork on the walls with stylized pics of DL attractions, as well as a Tinkerbell pixie dust border that glowed in the dark. I posted pics of my room on the Resort Rooms thread here on this board.
There was also a lot of great history around the hotel - tons of memorabilia, pictures, etc. in the lobby and along the hallways of the main areas. The pool area was themed to Peter Pan, and was delightful. The grounds were nice and spacious, with lots of neat topiaries, gardens, waterfalls, etc. I really wish WDW had something quite as "Disney" as that was.
We went back and forth between staying there, offsite, or the GCH. Although I've heard the GCH is great, we really enjoyed the DLH, and wouldn't hesitate to go back.