if you can afford it, stay on-site! what about renting a villa? you can either pay like a regular hotel room to disney, or rent points from a dvc member. there's a rent/trade board here (i think). you'd have kitchen facilities then. OR a ft. wilderness cabin... full kitchen, livingroom, bedroom, porch, grill & picnic table. and remember, even in a regular room, you can have a small fridge in your room ($10 a day in value resorts), and i believe free in mods and deluxe. you could then have breakfast every morning in your room (milk/cereal, bagels/cream cheese, yogurts and fruit). i've heard of people running just water in the coffee maker to have hot oatmeal, soups, etc, too. you can't "cook" but can definitely make due for breakfast, snacks & sandwiches to save money.
i stayed off site once, and we did other orlando things too, but it was just like disney was a side trip. that trip cannot compare to the feeling of staying on site (which we've done 5 times in the past 3 years). oh, and for our off site trip we stayed in a beautiful, huge 2 bedroom condo (and we didn't have kids yet) with lovely grounds, close to disney, etc. But we weren't "at" disney, and it made a big difference. we've had the opportunity to stay at a hotel off site for each trip where a family member works for practically free for a great suite, but i don't want to. if i could afford nothing else, then i would, but not otherwise.
hth!