I agree that the Values would be a fine option for kids that young.

My boys were 4 & 2 last August when we stayed at POP. They loved seeing the giant Roger Rabbit (even though they didn't know who he was), Mr. & Mrs. Potato Head that were larger than Mommy and Daddy, and the rubiks cubes that lit up all those bright colors at night. There was also a nice playground and areas to splash around with fountains coming up.
The part I liked best was how convenient the LARGE food court was. You had to walk to that area any way to catch the buses, so it was easy to stop for breakfast on the way out and dinner on the way back. (DEFINITELY get the MUGS here... you WILL get your money's worth! We filled up at breakfast with a refill before hitting the bus stop, then we filled again at dinner and refilled before heading back to our room... 4x/day x however many days... and what were they? $11 or so?)
If you're looking into renting
DVC points, the BWV is convenient because of dining/shopping and boats to Epcot & DS. BC would be another option for similar reasons. Then there's the AKV which could be nice if your kids really like animals. I hear about people waking up, looking out the window, and seeing giraffes right there! How cool would that be? (I'd love to give my kids that experience some time... though only some rooms have a view of the animals... the pricier ones)
If you're money's not as big of an issue, I'd stay on the MK monorail loop, either Poly or CR... character dining available at both... I know Chef Mickey's at CR is a popular choice. Plus, getting to MK is so simple on the monorail - no long wait for a bus, and with young children you're bound to spend a lot of time at MK. And going to Crystal Palace in MK for a character breakfast is also nice for young ones because of Winnie the Pooh & friends.