I've stayed at both and whilst there's nothing actually wrong with the Santa Fe given the choice between that and Newport Bay, for me the NPB wins hands down everytime, there is no comparison. I have no idea why people knock the NPB so much, it's a big hotel, it doesn't try to disguise that fact, I believe it was the biggest hotel in Europe when it was built, but I'm sure you couldn't possibly have a longer walk from room to reception than we did at SF and at least you're walking indoors and I'm surprised to hear that the paint is peeling already, like all the onsite hotels the NPB was given a major overhaul in 2006, including paint, replacement windows and balconies, I suppose the elements take their toll very quickly. Interestingly though I remember how many people were remonstrating at the possibility of having workmen disrupt their holiday/hotel view etc., obviously a case of damned if you do and damned if you don't when it comes to hotel upkeep.
Just wondering why the big leap, from SF to NPB ? The Cheyenne has much nicer theming than the SF, other than that there's not much to choose between them. Have you considered the Sequoia ? cheaper than the NPB and whilst I can't say I like the hotel itself, I do like it's location, layout and in our experience the more refined breakfast compared to SF and Cheyenne. But as far as the hotel room goes, our rooms at SL have been tattier than those at Cheyenne or SF, although our SF room smelt bad, several times I went seaching for the dirty nappy I was convinced was hiding somewhere.
For me the SL/NPB's good points.
Location - no need to use shuttle buses

and it's a lovely walk to and from the parks.
Breakfast - Just our experience but it's calmer with a broader selection.
1 building ( Montana Room only at SL) - so you don't have to get dressed in your outdoor clothes to get to breakfast, go to the bar, hotel shop, reception etc.
Whether you decide to stay put or upgrade I'm sure you'll have a really lovely time.
