I just stayed at Nick Hotel in May for one night. I personally woudn't give up FOTL for the whole trip, but we were doing WDW this trip, not US/IOA. We saved serious $$$ by surprising our DS's with Nick Hotel the last night of the trip. The reason for saving $$$ was that once they saw the place, they were through with theme parks. We just hung out at the hotel and pools the day we checked in and the next day (we got late checkout). It was like spending $200 (w/tax) for a day and a half of down time. Mind you, it's not quiet and restful at the pool but the kids had a blast and we got to chill out on a lounge chair.
I don't think Nick Hotel is worth it for the whole theme park trip, because the kids won't want to leave the hotel. If you don't mind changing hotels, it makes a great end of the trip surprise. We actually left "clues" for the boys a day in advance leading up to checking into Nick. They loved the surprise. It was priceless to see their excitement as they followed the "clues" and their Dad drove into the Nick parking lot.