We will be there at the end of August too! :)
For a value resort, I would recommend Pop Century. It is the newest Disney resort, and has a very efficient bus system which I think you'll find helpful. Amenity-wise the value resorts are all basically the same, so the differences lie mainly in themeing. The All-Stars sometimes share a bus route, but All-Star Sports is generally first on that route so stay there if you want to eliminate extra stops.
As far as park tickets, in my opinion this is one area where you can easily save money. I personally would not purchase the water park option, and if you really want to save I would skip the hopper option as well. Unless your kids are exceptional swimmers, and also on the tall side, I don't think the water parks are ideal for them at this age. Blizzard Beach has an excellent kiddie area called Tikes Peak, but I don't think it's a full day event. Many of the bigger slides have height restrictions, so even if your kids are brave and strong swimmers, they could still be unable to ride. If you do elect to hit a water park, consider purchasing a one-day stand alone pass to do so rather than adding the water park option - you'll save a lot of money.
As for the park hoppers...I know they are very handy to have, but they are not by any means necessary. We have annual passes so we can park hop at any time, and we very rarely do. With little ones especially it is much easier to remain in one park for the entire day, and we prefer this to the hassle of hopping. Since you'd likely save a few hundred dollars by passing on the hopper option, I'd definitely do so.
Since you are traveling at the end of August, are you aware of the free dining promotion? I hope so - that's a great value for families! More information can be found
here.
Have a great vacation!