For a little guy I would recommend Garden Grill or Chef Mickey's. We did birthdays at both when our son was between 2-5 and he loved both of them. I do tend to think that Garden Grill might be a bit better if you want the characters and staff to make a big fuss over him. It isn't as crowded and I think the characters are able to spend more time at each table. But in terms of atmosphere - Chef Mickey's is really fun, it's kind of a "party" theme to begin with. Both have food little ones will enjoy but Chef Mickey's will have a wider variety for him to choose from since it is a buffet. My son was always happy with the desserts at the buffet or the dessert at the end of the meal at Garden Grill, but I did once order one of the pre-made cakes for my mom's birthday at Garden Grill (she had a GREAT time there for her birthday as well).
Oh, wait I just saw that your son was afraid of the characters! Garden Grill was the first place we took our son to when he saw the characters - he was just a baby. The CM asked if he had ever seen them before and when we told her no, she send Chip and Dale over to approach him very cautiously and then to spend some time with him when he seemed interested. They were SO good with him and I believe that is why he has had a lifelong love of the characters! If he seems better with the characters this trip you could let the CM at any restaurant with characters know that he has been afraid in the past and ask if they could approach him cautiously to make sure he will be okay. The characters are usually very good with kids who might be a bit hesitant about them.