Another excellent resource is the site www.intercot.com. It's dedicated to Disney World and I found the posts very helpful when trying to make intelligent decisions. A friend of mine is a moderator on there (and she goes to WDW every year for the last 10-12 years) and she's the one who turned me on to it.
We went to WDW last year with a 1-yr old and a 7-yr old. We chose to stay off site at the Hyatt since I had points and was able to get a better deal than the equivalent on-site resorts. It was pretty close--only about 15 minute drive--and had a nice pool area with all sorts of activities on the lake and at the resort. Since this was our first trip and Rome wasn't built in a day, we only did the 2-day pass WITHOUT the Park Hopper option. We knew that with everything there is to see at each park (we chose Magic Kingdom and Holllywood Studios), it would keep us all occupied plenty for one whole day per park. Now that we've experienced what each park has to offer, we might opt for the Park Hopper next time to then pick and choose which rides/activities we go to, but we were very happy not investing in that this first time. We also chose to keep our trip pretty short both to save money and to save sanity! We did do the Kennedy Space Center the third day and that was an incredible experience for us grown-ups and the 7-yr old.
From what I was told by my Disney-expert friend, if you're a newbie to Disney, the Magic Hours can be a little crazy, since there will be more people in the parks either at the beginning of the day or the end (depending on when the magic hours are).
Also, if you see a person carrying a flag, GO THE OTHER WAY! That is a tour group (usually Brazilian) of about 20 people that will totally fill up a line and make your wait longer. There are lots of these groups.
We did not partake in the dining plan mostly because we felt that we'd be able to save money by sharing items (like fries and such). I'm glad we did it this way because if we'd gotten any plan that included table-service, we wouldn't have been able to use it since all the reservations were full at the restaurants we wanted and we would have ended waiting huge amounts of time with tired, cranky and hungry kids. But I would have LOVED to eat at the Crystal Palace! Next time. I also love investigating what a local area has to offer in terms of good food, so the dining plan wouldn't have allowed us to do that. Also, Downtown Disney has some pretty good eating options.
My husband and I have started talking about what we'd do differently, if anything, the next time we go in a few years. And we'll likely schedule a trip around when my sister goes so we can stay on-site at the military resort there with her. But beyond that, we prefer flexibility, so being tied into plans and packages is not typically something we'd lean towards.
Have a completely fantastic time! No matter what you choose, you'll still have fun and you'll learn a lot for next time!