We have done both and I prefer staying on-site. When I'm going to WDW, I want to be in the "bubble" and not have to deal with the rest of the world. When we stay off-site, it's an OK trip, but in my mind we always have to leave the "bubble" and be faced with dealing with the rest of the outside world. I also like not having to deal with getting a rental car while I'm down there (though that won't be an issue for you). We fly in and let Disney do the driving after that.
So, it really depends on what you are hoping to get out of the trip and what your budget is. As others have mentioned, staying off-site can be less expensive and the rooms just as nice (if not nicer in some cases). But make sure to watch out for "resort fees" or "parking fees". Those can add up fast because they are usually daily fees, not a once-per-stay fee. You should also consider the daily parking fee at WDW when planning your budget. I think it's at $20 a day now. If you stay on-site, you don't have to pay that daily parking fee, even if you do drive to the parks each day.
If you want to be super close, you might want to look a the resorts by Disney Springs. A lot of them have daily resort fees though, so make sure to take that into account. Many of these are within walking distance to Disney Springs. We stayed at one of these once and I really liked being able to walk over there in the evening for a meal or just to take in the nightly entertainment.
We did the dining plan once and probably won't ever do it again. It was fun once, but it was soooo much food. Much more than we usually eat in a day.
Wishing you a fantastic trip!!!