We have been traveling to WDW often for the past 18 years and we now also own a home there. Before we used to stay at the Gaylord Palms hotel
www.gaylordpalms.com which is now owned by Marriott. This 5* hotel has an adults only pool and a separate pool/waterpark for children, plus there is a large atrium with alligators and waterfalls! It is a large convention hotel so it usually isn't overrun with children which I think is a good thing! There also are many restaurants on site and of course 24hr room service.
Another hotel that I like in the area is The Peabody
www.peabodyorlando.com which is located on International Drive within walking distance of restaurants etc. but we prefer Gaylord Palms.
If you are looking at high end hotels then the Ritz Carlton Grande Lakes is lovely as is the Four Seasons at Walt Disney World.
The best on-site hotel in my opinion is The Contemporary hotel as it is right next to the Magic Kingdom park and has the monorail line running right through it.
It really depends on how you are seeing this holiday - is it a go go go all day in the theme park type of trip and rest afterwards when you return home, or more of a luxury trip with part relaxations and part theme parks.
Also for a first timer i would recommend you concentrate on either Disney World of Universal and not try to do both in one trip.
As others have said, with a family I would personally recommend a villa instead as you have lots of space and kitchen facilities for the children and your own pool. There are villas to suit all sizes and budgets from 3 to 8 bedrooms and from £800-£5,000+ a week and the good ones get booked up months even years in advance.
We never cook in our villa as it is a holiday after all! We just have breakfast there in the morning and then either eat out for most meals or order in. We do rent our home and the website is
www.windsorhillsretreat.com