We just got back from WDW! We have 15 month old son and 7 year old daughter ~ same age as your kids. DEFINATELY the MK! We did 7 days at Disney:
4 times MK
2 times MGM
2 times Epcot
1 time AK
2 times Typhoon Lagoon
1 time Blizzard Beach
I took advice from these boards, it was, do what you and the 7 year old want to do and the baby will go along for the ride. It was great advice!
Our baby, who NEVER sleeps in his stroller at home, feel asleep happily everday around 11 am for 1 or 2 hours.
We would hit a PS character breakfast around 8:30 am, do a park with rides the baby could do from after breakfast until he feel asleep around noon. Then we would do the thrill rides with 7 year old daughter.
In the afternoon, when baby woke up, we would go back to CBR for a rest, then out again!
The kids bedtimes at home are: baby 7pm, 7 year old around 8pm. But at WDW the baby feel asleep between 8:30 and 9:30 pm ~ depending what we did that day and 7 year old dd feel asleep around 9 - 10 pm.
At MK the baby did the following rides:
Tomorrowland: Tomorrowland Transit Authority
Race cars
(would have done Buzz, but he napped)
Toontown: Character meet
Fantasyland: Pooh (3 times)
Snow White (2 times)
Peter Pan (2 times)
Carousel (once)
Small World (once)
Liberty Square: Haunted Mansion
Lots of other stuff at the other parks too!