You may find a few decorations all over the Disney properties, but the Magic Kingdom will be the most decorated. It is also home to
Mickey's Not So Scary Halloween Party, a special event held on select nights this fall. This is a hard-ticketed event, meaning it requires a ticket separate from those that you purchase as part of your vacation package. It is a family favorite amongst my group, and we attend every year. Here you will find your favorite Disney characters dressed up in Halloween costumes, which the kids really enjoy. There is also a special stage show, themed fireworks display, and - our favorite - the Boo to You parade. You can go trick or treating, have your face painted, take advantage of special party-only photo opportunities, and typically enjoy reduced crowds in the park, as well.
As for the water parks, my own daughters (9, 7, & 5) really enjoy both parks. We've found that there are pluses and minuses to both. At Blizzard Beach they enjoy the Tike's Peak and Ski Patrol areas for children, and we like that the Teamboat Springs waterslide is big enough to accommodate up to six people.
At Typhoon Lagoon, the family slide only holds four people and it passes through a section that dumps water from overhead, which my daughters
hate. But the kids areas are great fun, they prefer the waterslides here, and the wave pool is their favorite place in the parks. When we can only visit one, we gravitate to Typhoon Lagoon.
I hope you have a wonderful Disney vacation with your family!