We stayed at the WL in Jan. with a 2 yo and 6 yo. We love the WL (honeymooned there). The theming is great, the grounds are beautiful, the lobby is amazing, the balcony is nice, DD6 loved the pool, the location was great (loved rolling the stroller onto the boat to go to MK) and I like the all-in-one-building resort.
Just a note, the WL is close to the MK, but I didn't feel that the transportation was very quick. I might be wrong, but that is how I felt. The boat to MK also served FW. It took some time, but the boat ride is nice (and not folding the stroller to get on the bus is nice).
We didn't use the balcony as much as I think that we could and should have. We used it more at the end of our stay. We had to make an effort to use it, but it is great additional space.
That being said, a room at a moderate might work better. We had a pack and play for our 2 yo, and it seemed (someone might have a better idea) that the only place for it was in the door way or in the sink area. Either way, it was in the way and DD2 could stand up and see us when she was supposed to be going to sleep. Neither DD just fell asleep because of exhaustion like some kids do at WDW.
With a mod, you could put the PNP in the sink/closet area (the closet is open to the sink area) and pull the dressing curtain until your 2 yo falls asleep. Also, the door is at the opposite end of the room from the bathroom, so things might not get as clogged.
We were going to stay at POR, but, for various reasons (we had more money, we felt like we were going to spend a good amount of time at the resort with small children, etc.), we upgraded to WL. I also thought that we wouldn't be back for a few years. Well, we are going next year. I have to be honest...After staying in the same room with 2 young children for a week, I just decided that I didn't want to do it again. Before Jan., we hadn't been on a family vacation before, so it was all very new. Since then, we have been on shorter trips, and I booked suites. It has worked out much better. So, we are booked at the All Star Music Family Suites in Jan. 2008. It has a bedroom with a queen bed for me and DH, and the kids can sleep in the family room. Plus, it is less than a room at the WL.
Does that help or give you too many options???