I have stayed in the Legoland hotel and the nearby Copthorne slough Windsor.
The price difference is huge but the 'LL hotel is ace and although it was expensive I didn't feel like I had been ripped off as we had such a good time.
Pro's - park right next to the hotel, dump your bags and straight into the park.
Early entry into the park for certain rides (driving school, boating, atlantis) which means you can then be first in line for the rides that usually have massive queues (Egyptian laser thingy).
Themed rooms are ace, Lego for the kids to play with, treasure hunt.
Access to the splash pool although you need to book this.
Little gaming area next to the bar/restaurant where they can play while you relax with a large drink after walking all day.
Kids entertainment in the morning. They do a treasure hunt and if you find the key you get to open the park with a giant pair of scissors (My DS won this honour and still describes it as one of the best days of his life).
Cons:
Super expensive. Food isn't amazing and again is expensive.
The hotel at slough was fine. The room was clean, the staff were polite, parking was free, breakfast was nice and was included I think.
Personally I would say stay at the nearby hotel this time and do the legoland hotel when your DC is a little bit older and they get the full enjoyment of it and will remember it.