We have fallen in love with the Grand Californian. I agree that the
Disneyland Hotel has the better pool, but you absolutely can't beat the location of the Grand. It is centrally located in Downtown Disney. Takes about 5 minutes to walk to the entrance to Disneyland and has its own entrance into DCA. This is important to us because we have 2 young children under 5, and it's nice to be able to get to and from the parks quickly.
Also, the park views can't be beat. We had a view of Grizzly River Rapids/Soarin when we were there last fall. I have specifically requested this view again for our trip on the 25th (hooray!).
DLH is slightly closer to the monorail entrance than GCH. GCH is closer to DLR and DCA entrances than DLH. Also, I like having a balcony, and I don't think that there are balconies in the DLH rooms (feel free to correct me if I'm wrong).
As for the crowds, I would guess that they shouldn't be too bad. We were there the first week of October last year and could walk onto just about anything, especially first thing in the morning and later in the afternoon. One secret that I learned from a CM is that the park hours reflect prior year attendance. Meaning that if the park opens later and closes earlier, attendance was smaller on that day last year.
Definitely bring your own stroller for your 2 year old. We rented a stroller last time and regretted not having our own. First, when the child is sitting in the stroller it is very difficult to put any size bag in the storage area below them. Second, if you go from one park to the other, you have to turn in your stroller when you leave the first park, carry the child and your bags across to the other park entrance, and then check out another stroller in the 2nd park. You don't have to pay twice, just show your receipt to get another stroller, but it's still a pain. Not only that, but at the end of the day you can't stroller your child back to the hotel since they won't allow you to take rental strollers out of the park.
Have a wonderful trip!