I've done both
DVC and offsite. To me, onsite is not worth the prices most people pay. Of course, that's always in the eye of the beholder, but from my perspective, that's the bottom line.
I used to stay exclusively offsite. I absolutely require separate sleeping spaces for kids and adults, and prefer to have the use of a full kitchen. When we stay offsite, this costs about what a single Value Room would run---when you add in the costs of rental car and theme park parking, our loging+transportation costs a bit less than what a Moderate Room does, but gives us
significantly more and better equipped space. This extra space is very important to our comfort, as we simply can't get by on a single hotel room for a week. To get equivalent space onsite would cost us at least as much as our theme park tickets do---that's a lot of money.
A couple years ago, I purchased a (
very inexpensive) timeshare that was able to exchange into DVC units. Since then, we've stayed onsite exclusively. If you add up all the costs (II membership, exchange fee, resort services fee, annual maintenance on my week, etc.) it costs only a little more to stay onsite in a 1BR or 2BR DVC unit than it would to stay offsite in a 2BR condo.
And, it's really nice. I like it. But, DVC announced a few weeks ago that they are switching exchange companies. That might mean that I can no longer use my timeshare to stay at DVC. And, while I'll miss it a little, there's just no way I'm paying market rates to stay on property. Yes, I could afford it, but there are other things I would rather do with my money. My wife feels the same way.
So, for me, having done both, the value of an onsite stay just doesn't measure up to the price Disney charges for the privilege. However, this is necessarily a subjective opinion, and others can and do find the value justifies the price. That's why Baskin Robins has 31 flavors.