I would not go over a school break, unless one of the adults is a teacher. With kids that small, I would just opt for 2 rooms at All Star Movies. You cannot beat the theming here. The little ones (as well as old) will love it. If you want your friends to love WDW, try to keep the cost down for them. The pool area, playground, food court, arcade, gift shop, pool bar is just perfect for families with small children. The bus service is GREAT at the All Stars and the food court is the best we've seen yet. see faq's, photos, menus etc at wdwig.com.
Just make sure to bring lightweight, easy to fold up strollers. We used umbrella strollers for our son and they were great. Make sure to take mid-day breaks so the kids can swim and nap.
A good moderate for kids would be CBR, since the rooms have so much storage.