I also think on-site is better for the same reasons the pp stated. Plus I just like not having to go off-site if we don't want to. We have also traveled to WDW with family twice and stayed off-site both times. Once we had two rental cars and the other time we only had one. Having two cars was definitely preferable because inevitably our plans did not mesh somewhere and it was very difficult to coordinate and make everyone happy with only one car between two "parties". If you are on site however, having only one car, or even no car, should not present any problems because you can rely on Disney transportation.
As far as DVC goes, I would think you should be able to rent points for Feb/March but you don't want to wait until the last minute otherwise you might not get your choice of resort. Just as an FYI, Old Key West has more spacious villas than the other, newer resorts, in case that is important to you. I would go and check out the DVC Rent/Trade board and see what's available. There's a FAQ sticky at the top of the board you should read as well if you haven't already.
hth!
