Hi Robin!
My children are similar ages to yours and I do find that we spend a majority of our time at the Magic Kingdom. It absolutely has the most to offer small children and there is so much to do there. I think that spending two days at the Magic Kingdom is a great idea because you will be able to take your time enjoying all of the attractions and you'll have the opportunity to visit your daughters' favorites more than once.
If I had to choose one other park to visit with young children, I think I would go with Hollywood Studios. Here you will be able to visit with the popular Playhouse Disney characters like the Little Einsteins, JoJo and Goliath and Handy Manny. There is a wonderful show called
Playhouse Disney - Live on Stage! which is a lot of fun and full of really cute surprises. My daughter wanted to see it again and again. Right next to the Playhouse Disney show is
Voyage of The Little Mermaid. This show is a short re-telling of Ariel's story. I will warn you though that it is dark and could be scary for your youngest.
Another fun area at Hollywood Studios is Pixar Place where you can meet and greet the characters from Toy Story and Monsters Inc. You can also find one of my favorite attractions here -
Toy Story Mania! This is an interactive 3D arcade and is tons of fun.
I hope this helps you make your decision. No matter what you choose, I'm sure you'll all have a fantastic time!