Hi Lisa!
We're going to Disney in December, too! It's such a magical time to be at the parks!
Sounds like you already have a great plan--Yacht Club is awesome, the Dining Plan is amazing and a Park Hopper will help you see it all! (Well, most of it anyway!)
The answer to the which-park-which-day question has lots of answers...
You can go to the park that has the Extra Magic Hours and get some extra park-time in. Or do NOT go to that park because it's usually the most crowded of the day and just HOP to it during the extra magic hours.
You can find a website like touringplans.com and see the crowd predictions for the week to see which park is the least crowded.
You can plan which park you go to by what's happening that day--for example, go to Hollywood Studios the day Fantasmic is playing.
You can do one park per day and then park-hop to all your favorite (or missed) attractions on your last day.
Another way to decide which park you're going to is by your dining reservations. If you're set on Cinderella's Royal Table and can only get a reservation on a certain day--that's the day you'll want to go to Magic Kingdom!
Does that help? Or are you more confused? Please feel free to
ask another specific question and I'll see if I can help!
As far as Cirque? YES! YES! Your 12 and 8 year old will love it. My 5 year old went last year and besides being a little overwhelmed, she loved it. It's absolutely breathtaking.
Don't stress too much--your vacation will be magical!