Hi Lisa!
August is a great time of year to visit because the crowds start to decrease as kids start heading back to school. Also, while Walt Disney World (WDW) promotions are subject to change, historically they've offered the free dining promotion beginning mid-August through early October. I don't know if it will be offered the week of your stay, as the 2012 promotions for that timeframe haven't been announced, but if free dining is offered you can call reservations and have a cast member apply the promotion to your reservation.
WDW typically holds special events throughout the year, such as the
Sounds Like Summer Concert Series during the months of June and July,
Night of Joy in September,
International Flower and Garden Festival from March-May and much more, however August is a light month in the way of special events. The positive to this is that there will be less crowds.
Don't worry though, there will still be plenty to do. I suggest checking out the
Traveling with Little Ones guide for the scoop on the best attractions for your two little ones. Check back in a few months on the
Special Events at Walt Disney World website to see if any new events for August have been added. It's still early in the year and you never know what Disney is planning!
Magically,
Stacy