Newport bay is my favourite Disneyland Paris hotel, but I have stayed at most of the others (Hotel New York booked for upcoming visit) and also at nearby non-Disney hotels, B&B (like Travelodge) and rented a cottage in the area too.
The Disneyland hotel is right at the park gates so less walking, but it is very expensive. The New York, Sequoia and Newport Bay are all located around Lake Disney, which is about a 10-15 minute walk (I'm assuming the little ones are in pushchairs) through Disney Village to the parks. Santa fe and Cheyenne hotels are a bit further out (15-20 mins walk) but I wouldn't recommend Cheyeen for your family as all rooms have bunk beds, not suitable for under age 6. All the Disney hotels (except DLH obviously) have free, frequent shuttle buses to the parks and unless you are leaving after Dreams/parade with the crowds, they aren't too busy. Only other option is a self-catering cabin at Davy Crockets Ranch but that's only possible if you drive there as there is no shuttle bus.
The next nearest non-Disney hotels are the Val de france ones, near Magne le Hongre. They are Magic Circus, Explorers, Dream Castle and Kyriad. they vary in price (Kyriad is cheapest) and facilities available (Explorers has a good family friendly swimming pool and rooms with separate bedrooms for kids) but they are all 'partnered' with Disney so you can book park tickets as a package with your hotel. There is a regular and free shuttle bus from here to the parks too. It is possible to walk the distance but its not recommended as it requires crossing a main road.
There are also two other partner hotels in Val d'Europe which is close to the big shopping mall and huge Auchan supermarket. They are Hotel l'Elysee and the Adagio Aparthotel. The Adagio includes a small kitchenette in the room which is useful if you want to keep costs down by self-catering. There are several other aparthotels in Val d'Europe such as Hipark, Sejours et Affaires and Residholme, but as they are not partner hotels, you will need to buy park tickets separately. The PEPS 50 shuttle bus serves this area and will take you to Disneyland for free but they are not as frequent as other shuttles. However there is a train station at Val d'Europe with trains to the park gates every 15 mins (journey time approx. 2 mins) and also direct train into central Paris.
Further out from this there are many, many other hotels which are considerably cheaper but obviously journey time is longer and some like the F1 motel, Balladins and Ibis don't have very good public transport links making it hard to get to and from the parks. I'd only recommend staying that far out if you are confident at driving in France. You can get real bargains there though- as low as €30 per night in low season!