Hi Michelle!
Disney has various categories of hotels at Walt Disney World:
- Deluxe Villas
- Deluxe
- Moderate
- Value
As you can imagine, the Deluxe Resorts (villas and regular rooms) offer the most service and amenities, and usually have the best location. My favorite Deluxe Resort is the Wilderness Lodge. My favorite Moderate is Port Orleans Riverside, and my favorite Value is Pop Century. If your budget allows, definitely look into a Disney Deluxe Resort. With young children, you might consider staying in a Magic Kingdom resort as that will give you easy access to the Magic Kingdom. Three of the Magic Kingdom Deluxe Resorts are on the monorail line, making it very easy to return in the afternoon for a nap or a swim to relax: The Grand Floridian, the Polynesian, and the Contemporary (and Bay Lake Tower which is a Deluxe Villa attached to the Contemporary). The Wilderness Lodge is another Deluxe Resort, but it's connection to the Magic Kingdom is via a boat.
My youngest son is 7 years old and he loves every theme park at Walt Disney World. His favorite is the Magic Kingdom, followed by Disney's Hollywood Studios. I don't think he can decide which is his least favorite park as it changes all the time! However, he never complains about visiting any of the parks and he has favorite attractions in all of theme. With two young children, you will probably be spending most of your time in the Magic Kingdom; I would definitely plan on spending two days there if you can.
By the way, since this is your first trip, I recommend getting the book "The Complete Walt Disney World" by Julie and Mike Neel. It is a great book for first time visitors as it is full of information without being overwhelming. It is also a beautiful book full of color photographs!
I hope this helps in the planning process. Write back if you have any more questions!