We just came back from a stay on-site at WDW and we are also Disney Vacation Club owners. We did a split stay Bay Lake Towers/ Animal Kingdom Lodge. My sister stayed at the Vistana in one of the renovated 2 bedroom rooms. Here is our experience! We were picked up from the airport by the Magical Express-we did not have to wait, nor was it crowded. We would use it again!
We love staying at BLT with the Monorail access to Magic Kingdom and Transportation Center. We never had to wait long for the Monorail. We never waited more than 5 minutes for the Monorail, and always boarded. The convenience of the Monorail was key for us. If for some reason you do not want to take the Monorail to the MK, it is a ten minute walk to the MK. I would think with young children Magic Kingdom will be a big priority for you.
We liked having early morning entry or late evening entry perk for on-site guests. We utilized Disney Transportation and it worked well for us from BLT. My sister commuted from Vistana to WDW and she has done this for years. I put her on my reservation, with keys so she had access to our room and perks. She did not want to go back to the Vistana and she now wants to buy DVC, because she loved staying on-site.
On our second half of our trip we stayed at Animal Kingdom Lodge. We took the buses everywhere from that location. Obviously AKL/AKV is closest to Animal Kingdom, but our experience was not like others that described it as taking a long time. AKL/AKV has it's own designated bus and we never waited more than 10 minutes except once we wait for 20 minutes. My DD timed the busses by the schedule and it seemed to work, because we waited 10 minutes before a bus arrived. We were able to secure seats on every bus except once we had to stand. We preferred the Monorail transportation, but AKL has it own wonderful perks too. It is well themed and we saw all sorts of animals from our balcony. We were on the 6th floor in Jambo House, which is not suppose to be the best view of the Savannah, but we saw lots of animals.
Overall, we liked staying at both resorts for different reasons. We love staying on-site for the convenience and perks. I went to the Vistana with my sister and although it was nearby, personally I would not want to go back and forth off-site. Many people do so and are perfectly fine with it. I would not be. I have heard horror stories of Disney's transportation, and in ten days we did not experience it. Some people feel more comfortable renting a car, and that is always a option. You just need to decide what is important to you!
What ever you decide whether on-site or off-site I would suggest is doing your homework for planing a WDW vacation.
www.mouseowners.com is a good place to start and my favorite. The Disboards is another one. I used
http://www.tourguidemike.com/index.asp which was incredible. It is a paid subscription, but I felt it was worth it. I began to plan with TGM 1 1/2 years before our trip and when it was time for our trip I was well prepared. Dining reservations need to be made 180 days out, and there are many other things that also have critical time windows. We had a fantastic vacation! I took the time to plan and it was fun but once we were there all my hard work paid off, and we reaped the benefits!
Resorts on the Monorail hotel route are Polynesian, Grand Floridan, Contemporary/BLT, and Wilderness Lodge. Good Luck!