We are very happy with DVC, and we have similiar travel patterns. We have DS who is now 3, and baby #2 is expected shortly. Our next trip with be Jan 2011 at BLT.
We bought at BLT because of the short walk to MK - perfect with little ones. We do am's in the park, come back for nap time, and then may head back to the park in the pm, or else swim, relax, etc.
We did not buy into DVC to save money though. We probably spend the same as the Deluxe visit each time because we book a 1 bedroom (so we needed to buy more points than just a studio stay would cost). It's great to have a kitchen and washer/dryer with the little ones too, plus a separate room so while kids are napping/sleeping, the adults can watch TV or relax a bit too.
However, we save money on food - eating in breakfast and dinner most of the time. Also, we plan our trips about 11 1/2 months apart so 1 AP can cover 2 trips (and DVC also provides the AP discount).
We owned at BWV first (and still own there). I think we'll go back to BWV stays once the kids are older, as the walk to Epcot and DHS is very appealling too. You can visit whatever park in the am, still take a break back in the room, and then plan dinners out at Epcot.