The dining plan was totally worth it. We have been to Disney 3 times in the last 5 years, twice without the dining plan and the last time with it. Definitely a difference with the DP. We did not have to worry about the cost of the meal. With 5 people going, you can easily spend over $100-$150 per day on food. If you do character dining, then you can spend way more.
We just went in January and did it with the DP. I have 4 kids aged 6, 4 1/2, 2 1/2 and 5 month old. We had to pay for the 2 older kids, but there was enough food from the 4 meals that we paid for to feed the 2 1/2 yr old. Just make sure you make reservations for all of your character dining before you go to Disney. They do not check the age of the kids so I would not worry about your almost 3 year old.
We are going back again in Septemeber and plan on doing the dining plan again. I tell everyone I know who is going that it is totally worth it. You get a lot of food and spend almost no money out of pocket (you just have to pay fo gratuities at the sit down restaurants).
We did have snacks left over at the end of the trip so I just got a few bags of pretzels for the kids for the airplane ride home. You get plenty to drink. You can always use a snack to get the kids milk, which can cost about $2 per bottle.