MN Disney-ites are pretty much divided between those who love staying in the resorts and those (like me) who prefer renting a villa or apartment close by. The resorts are great for kids, obviously, but I find it all a bit relentlessly Disney
- totally up to what you want out of your stay.
Are you going to hire a car? If not, the Disney resorts and nearby hotels (I-Drive etc) are good, as they usually offer shuttles to and from the parks. It is do-able without a car, but I have to be honest, we always hire a car - gives you the freedom to get out and about for restaurants and bars, take day trips away from the parks, and visit various shopping malls etc. We also froze bottles of water in our apartment and left them in the car boot, so whenever we left the parks and were tired and hot, we had nice cold water. Such a 'Rake A Break' tip, but the best I could give you, as it is just SO hot there! 
The Disney/Universal parks will be packed and roasting hot by midday, but we have been two years in a row at this time, and it is do-able with a bit of planning. Just be prepared not to be able to do a whole day at park, as it really does just get too, too hot (and there is NO shade at Disney or Universal!). We either got to the parks when they first opened and were out by lunch time, when it starts to get really unbearably busy and hot, or we spent the day by the pool, and went to Disney at night for the fireworks and closing parades (very busy, but magical).
Definitely check out the water parks. We love Disney's Typhoon Lagoon best (get there really early, and study the park map so you have an idea of where you want to have your 'spot' for the day, as people literally run in to the park when it opens and grab the best spots / places with shade!).
I love Disney/Orlando - we have been every year for the past 5 years - so am happy to give you more detail on any aspect of it.