We are a family of five, and stayed onsite last year for our first Florida holiday, it really made the holiday. Port Orleans Riverside is the only Value/Moderate resort you can officially stay as 5. We managed to eat breakfast in our room, keep cereal and buy milk/bagels at the shop. BUY REFILLABLE mugs too!!
The best bit was not the room, but the surroundings, we spent a lot of time at the pool and hot tub at some point in the day, and that was easy to jump on a bus. Our youngest was 4, eldest 11. Getting into a car and negotiating traffic jams would have spoilt that, and the Disney resorts are a continuation of the parks anyway!! We just felt that a villa pool was so small in comparison, loved the lobby areas and shops etc.
By judicious planning it need not be more expensive. However, we are a camping family, and so don't mind a squash, it helps that our children are all girls too.
All in all, I don't think there is a right or wrong answer, we would probably consider a villa if we went again, as it would be new for us, and we know our way around a bit better now!!