We have stayed twice at Santa Fe which is the cheapest on site hotel. Although the facilities were basic (no swimming pool) we were happy with the hotel and would certainly stay there again. The rooms have 2 double beds so obviously your children would need to share.
The Cheyenne which is only slightly more expensive offers bunk beds.
We have also spent a few nights at Explorers which we really like and worked out about the same as Santa Fe but facitilities were better- pool and large indoor play area. We still felt part of the magic as the hotel was themed as Disney hotels are.
We are staying this summer at Holiday Inn which also looks good and does great rates- look at their website as lots of pictures there.
I think you need to decide how much time you will spend in the hotel whether its worth having extra facilities etc.
We were happy staying in Santa Fe as we didnt spend any time there apart from sleeping so didnt miss having pool etc.
Advantages of being on site are:
Nice distance to walk to parks
EMH
GMF breakfast available
Hotels off site are
usually cheaper -or same price but for better star rating but for us slightly too far to walk to parks (although I think some people have)
Cant have GMF
Can only get EMH if got annual pass.
There are 4 main ones all next to each other- Holiday Inn, Explorers, Dream Castle and ?? They all have free shuttle to the parks and really are part of the Dis magic as they are so close (closer than DCR)
We stayed in Paris in Hotel Wallace- found it on last minute .com We were happy with the hotel but again it was very basic with no facilities as such but we didnt want anything as we were out and about all day and evening. However this was a separate trip - just to do Paris we didnt visit DLP (although we were tempted!!!)
My opinion is to see Paris at its best you need to actually stay there but if all you want to do is have a quick visit there to see the main sites you could easily stay in DLP and travel there for a trip.