Lanzarote, it's fab there, go for a villa, and choose where you eat, in Puerto Del Carmen you will be spoilt for choice, at great value prices.
We find AI pretty poor value unless you intend to drink a lot! Hic-Hic! I expect not with a toddler! AI resorts always seem to be out if the way if things and always blooming repetitive buffets, which I hate, as I have a disability it's really inconvenient to me to keep getting up and down etc.
With a villa, which I am sure you would be able to get for a similar if not cheaper price, you could have your own heated pool, proper kitchen, washing machine and privacy, much better for a family.
We stayed AI at Costa Teguise, also in Lanzarote a few years back, at a place call Los Zocos, loads going on there, kids clubs etc, ok food etc and walkable to the main square where lots of people to go in the evenings, you could look that up?
I hope whatever you choose you will have a lovely holiday.