With your kids ages, you will spend a lot of time at Epcot and DHS. I would consider staying in an "Epcot Area resort", which is Boardwalk, Beach Club, Yacht Club or Swan/Dolphin (not owned by Disney, but on Disney property and with many of the same perks) that way you can easily walk to those 2 parks. Not having to park is really nice. We get Parkhopper tickets, and walk into Epcot for the food and ambiance almost every evening we stay at Disney.
I can see splurging for a Monorail resort for a once in a lifetime trip, but Contemporary would not be the resort I would pick for that. I would choose the Polynesian or Grand Floridian.
Beth, mom to older DD (8/01) and younger DD (10/06) and always missing Leah (4/22 - 5/1/05)