I say go but I'd wait and go in early June if you can. We've found that to be a good time - not too hot or crowded yet and possibly less expensive than spring break time. They will also be having Star Wars Weekends at DHS so if you have any Star Wars fans at your house that would be a big extra but it doesn't cost you anything extra.
I also second the recommendation to check into
www.vacationcentralflorida.com or other options for offsite accommodations - I think you might do even better. We have rented condos at Windsor Hills from the site above twice and they are very nice. They decorate with very tasteful Disney touches throughout the condo or townhouse, have a full kitchen w/Disney plates and cups for the kids, full-size washer and dryer, and outfit all the rooms with flatscreen tvs, iPod docks, etc. Their prices and cancellation policy are very reasonable and they are great folks to deal with. Check out the Orlando Hotels and Attractions board here on the Dis if you want more information about Windsor Hills or offsite accommodations in general. One thing about staying in condos and pool homes, tho - you'll most likely end up doing more housework than if you'd stayed in a hotel suite. I've learned that, for me personally, I don't like having to do a lot of cooking and housework while we're at Disney. But if it was the only way we could comfortably go, I'd definitely do it again. It's just good to go in knowing, tho.
One thing we did last trip that was awesome - we filled a backpack cooler with bottled water, the single-serve pkgs of lemonade mix, and a variety of snacks - Pringles, slices of cheddar cheese, grapes and strawberries, and Flipz Pretzel crackers were our usual. It was so nice to be able to grab a bench and have a snack without standing in line. Plus it saved quite a bit of money. We refilled our water bottles at the water fountains around the parks so I don't think we ever bought water in the parks the whole week. We definitely plan to do this again next trip - it was certainly worth the hassle of carrying the backpack around.
ETA - If you want to do as some suggest and pre-purchase treats for the kids, both Dollar Tree and Target's Dollar Spot are good places to look. I also found some good deals on clearance stuff at
Walmart a couple weeks ago. I got DD a Princess and the Frog stationary set w/stickers and such for $1.50 and a big tube of lip balm w/Disney princess stickers and gems to decorate it for $1. Last year, the Dollar Spot had color pencils, mechanical pencils, little notebooks, and zippered pencil cases w/Nemo, Ariel, Camp Rock, and Hannah Montana designs. There were probably some for boys too but my DS is way too old for that stuff now. This stuff is great for the drive too - gives DD a break from playing her DS.