Oh boy, I completely understand your dilemma! I will say that you won't go wrong whichever one you choose

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I had the same experience as Molly with my first trip to GCH...our room was so far away from the elevators (which take you down to the maze that leads you out to DTD) that I really think we were closer to the DL entrance when we stayed in Dreams at DLH. I did learn from that experience, though, and have never accepted a room in the back 40 since then. I always request a 2-queen-and-a-daybed room near the main elevators. I don't always get the 2Q and DB, but I have at least ended up with a room that was close (all the 2Q/DB rooms are near the lobby so you don't have that daunting walk). If they assign you a room that is far away, plead your case and try to get them to move you closer. It made a WORLD of difference in my attitude about the hotel! I'm now kind of torn between GCH and DLH. The pool is really nice, the jacuzzi great, and WWS is a good choice for relatively inexpensive food. The hotel's location is wonderful (love WoD, Hagen Daaz, La Brea and the entrance gate so close by). There is piano playing in the lobby and storytelling by the fireside. There's also a little area in the lobby where kids can watch Disney cartoons while the parents relax with a beverage. Pinocchio's workshop is located in GCH, so if you can afford the price, you can leave your kids for a few hours while you and dh go to dinner. Supposedly, kids LOVE it but it isn't in my budget with 3 kids so I don't know from personal experience.
My first choice with kids your kids' ages would be DLH. I read a lot of so-so reports from others, but our stays have always been beyond excellent. I was there in Jan. in a newly remodeled room in Dreams with a pool view. It was very cool! I have to say that I do love the old rooms too and would be perfectly happy with one of those. They are more traditional/fanciful/whimsical while the new ones are sleek and modern. My girls adore DLH--the grounds are amazing, Goofy walks around and greets people, the dining options are good and I love being near RFC, the monorail, and Compass Bookstore. The rooms are spacious, too, with most being 2Q/DB rooms. I prefer Dreams, then Magic, and lastly Wonder tower. I try very hard not to get Wonder because it feels too disconnected from the rest of the hotel and feels to me like it's almost in the employee parking lot. There are a lot of cool things for kids to see and do at DLH--little remote control boats, movies in a special little theater, Goofy's Kitchen characters (even if you don't go there for a meal you can still see them walking around inside), MM statue, waterfalls and koi ponds etc.
Usually I think PPH concierge is a great bargain, but in your case it doesn't seem like it would be worthwhile. Admittedly, the concierge food is nothing to flip over in any of the 3 but when you can get it for the same price as a regular room at DLH it's tempting. PPH is very nice but it is nowhere near DLH, IMO. There are basically no grounds at all and a standard pool. The waterslide is nice but I love the landscaped, fancy pools at the other 2 hotels so much better. I can't see much reason to choose PPH standard but I'm much more into the whole resort aspect of the hotel. That's why I'm staying at a Disney property!
But really, any of the 3 would be a wonderful spot for your family vacation.