We just took our 10th trip last month. As somebody else said, you are really just going to have to figure out through experience what works for your family, but I'll share some things that work for us.
Don't do the all-star resorts. Fewer buses, longer walks to the bus, and no shelter at the bus stop at the hotel. Not having to stand in the hot sun or rain waiting for the bus makes the cost difference of the better hotels worth it.
We prefer the moderate resorts for the cost, since we really aren't there much anyway. From Caribbean Beach you can see the skyrockets from the Epcot fireworks. From Port Orleans you can take a boat ride to Downtown Disney.
Our experience with the regular meal plan was that you almost have to plan your day around the meals to make sure you used all your table services because of waits/reservations. We were much happier with the two counter service meals/day plan. The counter service meals are large enough for two if you aren't a big eater, and it's easier to just eat when you get hungry.
We took our daughter at just short of 5 yoa. When we went this last time (3 years later) I was amazed at the things she remembered.
This site has tons of good information:
www.disboards.com