Hi.
You have gotten a lot of replies, but I wanted to add my experiences to the list.
In October 2004, we stayed at WL with our 3 month old and 2 year old. The room was tight, probably because we had the pack n play set up for the baby, but also because there is not a whole lot of space between the end of the beds and the armoire and table. Room size is a factor when I choose my resort now because my DS is a very active 3 year old and my DD is crawling around and into everything. However, I love the WL for its theming, Roaring Fork (the 24 hour food place), proximity to MK (the boat ride is so relaxing!) and overall ambiance. I think our next big trip will be at the WL.
Last month we spent 9 nights at the Polynesian. We were in the Tokelau building which is close to the TTC. I love the Polynesian for so many reasons, but I chose it on this trip for the size of the rooms. And boy was I glad I did. We had a TON of room for the kids to play, we kept the double stroller open AND we had a crib and there was still room to move. I loved being close to both the TTC and the Great Ceremonial House. The grounds are beautiful and it was great sitting on the beach at night watching the fireworks. Also, the pool at the Polynesian is more kid friendly, in my opinion, although WL has a separate kiddie pool. But the Polynesian's pool is a zero entry, which is like walking into the ocean. The Polynesian also has a sprinkler/fountain area that my DS loved. And don't forget the Neverland Club with free activites for the kids in the afternoons.
So, I think that if you want bigger rooms, access to the monorail and TTC, lovely theming and can swing it, I'd go for the Polynesian. But don't forget that whichever resort you choose you are in Disney and both are magical! Good luck with your decision!!!