I had been to WDW before, but this past February was the first trip for my dd8 and my ds17. We flew because the drive for us would be about 22-24 hours, and that just wasn't feasible. Here's a breakdown of our costs:
$750 for a 4 bedroom, 3 bath villa 10 minutes from the parks; the price included taxes and pool heat. We had our own pool, jaccuzzi, game room, kitchen, etc. I didn't do any cooking, but we had cereal, toast, etc. in the mornings before leaving for the parks. It was great having space to spread out at the end of the day, and for some downtime from all of the hustle and bustle. I like kids, but frankly I think I would have been frazzled at the end of the week if I were around families with small kids at my hotel after being in some crowds with them all day. I also liked having a washer and dryer available; it allowed us to pack a lot lighter, and to only take carry-ons instead of checking luggage (and paying for that)
$380 for a mini van rental. Dollar had a rental special of a minivan for $299 for the week, plus taxes and fees
$529 for direct flights on AirTran ($69 each way, plus taxes and fees)
$60 for airport shuttle from our house to the airport, and from the airport to home when we returned
$650 for WDW tickets
$72 parking at WDW (12/day x 6 days)
$160 for Hoop De Doo dinner show
$70 for Princess Breakfast at Askerhaus
$50 for gas for van
$75 at Publix for water, soda, milk, cereal, bread, peanut butter, snacks, "adult beverages"
Total before souvies and food (other than Hoop and the princess breakfast):
$2,800
I budgeted $150/day for food, and we didn't spend nearly that much. We're not a big table service kind of family, and we wanted to spend our time at the parks enjoying the rides and attractions, grabbing counter service stuff and snacks along the way. One night we ordered pizza delivery to our villa, one night we went to Bob Evans for a late dinner after leaving the park...you get the idea. I took along $1,500 in cash, and came home with about $800, so my cost for our trip was about $3,500.

Your cost would obviously be higher, needing another adult ticket for WDW and airfare for an additional person, but I think $4,000 is a fair estimate if you fly.
My kids had their own money for souveniers. They received Disney gift cards from their grandparents for Christmas, and both of them took along some of their allowance money. My dd bought a balloon for about $15

and a WDW hoodie for abour $30. My ds bought a WDW hoodie for about $50. Before we left, I picked up a disney princess photo album, glow necklaces, disney coloring books, etc. at the dollar store and took them along.
If it were me, I'd get my car tuned up, get each of my kids a portable dvd player and an MP3 and plan on driving. Or, as a pp said, maybe it's time to consider buying a different vehicle if one is on its last legs anyway, and drive that to WDW. I'd also skip doing Universal, SeaWorld, etc. this trip. Doing other parks adds a LOT of $$$ to the overall cost, and you will have so much to do and see at WDW that you won't miss the other attractions.
As a side note, my ds was not at all excited about our trip during the planning stages. Think about the way Disney markets itself; towards little kids, with images of magic and fairies. I was afraid he'd be rolling his eyes and have an attitude the whole time we were there.

When we got to Orlando, we went to Downtown Disney first, and had a nice lunch at Wolfgang Puck Express. We talked around for awhile, and really enjoyed the surroundings. Then we headed to MK. We got there just as the 3pm parade was starting. We watched that, and then went to Tomorrowland. We saw Monsters Inc. Laugh Floor, then did the Buzz Lightyear spin ride, and that was all it took; from that point on, my ds was TOTALLY into our trip!!


He'd take the guidebook each evening at our villa, and plan what he would like to do the following day, depending on which park we were headed to. He had just as much fun as his 8 year old sister!!
I highly recommend you buy a copy of the Unofficial GuideBook, even though the one available in bookstores is for 2009. There's so much info it's mind boggling, but has great ideas, tips and suggestions. I found the villa we rented through one of their recommended websites; the link is
http://www.lastminutevillas.com
I simply typed in the criteria for what we were looking for, and got tons of emails from owners with really nice places available for rent.
Keep asking questions and cruising the boards here; people are quite helpful and have some wonderful suggestions and ideas. Have fun planning!!