Yes, you can add a baby under 3 to just about all wdw resort reservations.
However, expect POP to feel crowded with 4 people and a crib.
I'm assuming that money is an issue in deciding to go with the value resort. So, I'd add the suggestion that they plan their packing and organization carefully.
There are lots of suggestions around these boards, but one of the best is to bring hanging shoes holders. People use them to store toiletries in the bathroom. I think you could likely put one on each side of this door to hold other items in the room. And, I've often wondered why people don't talk about bringing one for their closet to hold their shoes too!
If their luggage is sized such that they can pack it into itself and put a single suitcase away in the closet (or ask bell services to store it) that will also help. (Living out of the suitcase may seem simpler but can make an already crowded room unmanageable).