Hi, we have been to dubai before without children and later on in the year so it was less humid/hot.
It's highly likely that we will be there in July. We will be visiting someone so that is the only time we can go otherwise I would avoid going at this time of year because of the heat. It is a holiday for us but its mainly to meet up with people so we aren't bothered about sight seeing etc as we have done been before.
I'd like advice on things to do with 2 small children (18 months & 5 year old) to avoid the heat really. I'm not even sure the water parks are going to be any good for the youngest.
It will be VERY hot. I lived in the ME for 6 years and most expats escaped for the summer.
The water parks are pretty good (wild wadi and one at atlantis) there are good areas for children and a lot of shady places. My advice would be to go first thing when they open and just spend a few hours and then home after lunch.
Some of the malls have nice children's play areas to kill a few hours.