You will find 90% of the people on these boards will tell you that you have to stay onsite to have a great vacation - I don't believe that to be true. We have done both, and while I like staying onsite, if you want an apartment then you really can't beat the space and price of an offsite suite or condo. Even a 1 bedroom at a DVC property is not that big - it means you get a bedroom and the kids have to sleep on the sofa bed - not ideal, and the price of a 2 bedroom is high, even if you are renting points.
We stayed in a condo at Windsor Palms which is just offsite, about 10 minutes from Animal Kingdom if you use the Sherbeth Road shortcut, and the quality of accomodation for the price we paid was incredible- we paid about $700 for 2 weeks in the condo - that's $50 a night for 2 bedrooms, 2 bathrooms, living room, kitchen and laundry - that would get you about 3 nights at 2 bed DVC property. (granted it was the very off season which is why it was so cheap).
If you have your own car, then I don't think offsite is that much more inconvienent than on-site, except for visiting the Magic Kingdom, when I will admit the TTC gets a bit annoying. You do have to check the location of your accomodation very carefully though, just because it says 5 minutes ot Disney doesn't mean it really is. Another plcae worth checking out is Cypress Pointe which is very very close to Downtown Disney.
Saying all that - if you don't really need a kitchen, then there is no reason you can't stay in a single room onsite - we did that on our last trip, me, dh, dd age 6 and dd age 14 months shared a room at Port Orleans FQ for 2 weeks, and we managed just fine - I did miss the washing machine but it wasn't desperate and for a shorter trip it wouldn't have been an issue.
If I am honest, I do like being onsite, but the standard of accomodation offsite can be so much superior (and so much cheaper) that it is an optoin that really needs serious consideration.