Our first trip was in Jan. with DD2 and DD6 for 7 nights.
Our next trip will be in Jan. 2008 with DD3 and DD7 for 7 nights.
It did get a little tight in one hotel room for a week - we used a PNP and stayed at WL. Our next trip will be at ASMusic Family Suites (with a bedroom and living area for separate rooms for sleeping). I wouldn't have wanted to go for a shorter time. I looked at it like a long relaxing vacation, and I didn't want to feel like we had to be at the park to get our money's worth. We just needed to enjoy ourselves, whether it was at the resort, parks, shopping, or eating. It is a different, slower trip with small kids (we had been for our honeymoon and then another short trip with just the two of us). We went back to the resort every day for DD2 to nap, but DD6 napped most days, too (as did DH!). I think that DD6 had sensory overload in addition to being tired.
To be honest, I wouldn't have taken a trip with just a 2 yo. DD6 was almost 7 and at a great Disney age to understand and appreciate attractions, and she might remember the trip as an adult. I don't think that they have to remember the trip as an adult for the trip to be "worth it", but I have memories of early trips (we lived in Florida until I was 6) and appreciate it. 2 yos are generally a lot of work, and they are even more work on vacation. DD2 enjoyed the princesses and Mickey and Minnie, and she seemed to enjoy some of the rides. It was just difficult to tell. Just 6 months later, and she is so much more expressive. I'm excited for our next trip when she will be 3. She dresses herself and is potty trained (and hopefully won't lose her $30 pair of shoes at Epcot again!).
I think that the age that you take your child depends more on the parent. It just depends on how much you want to do (how much work) on vacation and how often that you think that you might go back, as well as other factors.