Last weekend our family took a small vacation to Orange County and Knott's Berry Farm. After meeting my wife's parents and her siblings in Westminster for Mother's Day lunch, we spent most of the afternoon at Downtown Disney, the shopping and dining area next door to the Disneyland theme parks. 
We went into the Rainforest Cafe and looked at the theming, and then spent quite a while in the Lego store which is pretty elaborately decorated. We then took a break and spent a half hour inside the Grand Californian hotel, the Disney hotel which tries to follow the theming of the classic lodges of the western National Parks like Yosemite and the Grand Canyon. We then checked out the merchandise in the giant Disney Store at the east end of Downtown Disney before heading back to our car.
We drove to Knott's Berry Farm (in Buena Park, a few miles northwest of Anaheim), where we stayed the night at the Knott's Berry Farm Resort Hotel, which was formerly a Raddison Hotel but was purchased a few years ago by Cedar Fair, the Ohio-based theme park company, so that they could sell hotel and theme park packages. Because it was the off-season and we stayed on a Sunday night, the room was just $59, a real bargain as far as hotels close to theme parks in Southern California. The hotel is just down the street from the main entrance and shops, a five-minute walk from the entrance.
The hotel has one wing of rooms with the Snoopy theme, with the Peanuts characters decorations and a personal visit by Snoopy himself. I considered upgrading our room, but there is not discount on the Snoopy rooms (I believe it was $135). While I was checking in, Snoopy made an appearance outside the hotel, and my wife and kids got to take some photos together. I overheard a porter saying that Snoopy is in the lobby/restaurant area during breakfast time, so the themed room did not seem cost effective.
We spent the rest of the afternoon in the pool and jacuzzi area, which was fairly nice (especially because there were only three or four families there). After dinner, we walked around the various shops outside the park which sell all kinds of food and merchandise, including Disney memorabilia, Knott's Berry Farm jams and preservatives, and a Snoopy-themed store.
Monday we spent all day at Knott's Berry Farm, from about 10 AM until about 4 PM. With a discount coupon from Burger King, we paid $29 per adult ($49.99 full price), which is a really good price compared to Disneyland ($66 after the latest price increase). Disneyland doesn't do any discounting except for promotions like the 2fer (spend one day in Disneyland and one other day in California Adventure for the price of a one-day ticket).
If you've never been to Knott's Berry Farm, their Camp Snoopy area, which is for kids, is a lot of fun for young children. The rides are not elaborately themed like the dark rides in Disneyland's Fantasyland (Peter Pan, Mr. Toad, etc.), but then again, the rides in Camp Snoopy are just rides. I don't think any kids will have nightmares from riding them like might happen on Snow White or Mr. Toad. I am sure that children who really love the Disney films enjoy being immersed in the experience of the worlds of their favorite movies, but I also believe that children don't really enjoy many of the rides and attractions at Disneyland until they are about age 6 or 7.
If you have smaller children and can go to the park on a non-summer and non-holiday weekday, you might be able to not wait more than two or three minutes to go on any ride. I won't say anything about the summer, when I imagine the park is both crowded and less fun. There were times on our visit when our family had the whole ride just to ourselves.
Of course, you don't get the fantastic shows and parades at Disneyland which are fun for younger children as well (like Fantasmic or the Parade of Dreams). There is a stage show featuring the Peanuts characters (alas, no Snoopy, though), and the Mystery Lodge is a Native American show that reminds me of the earnest quasi-educational attractions that Disneyland had when I was growing up (like Mission to the Moon and Great Moments with Mr. Lincoln). They also have Native Americans performing dances and music.
The other thing that I like about Knott's Berry Farm is that it feels authentic in a way that Disneyland does not. The Ghost Town is based on real buildings that Walter Knott helped to restore in Calico (Ghost Town) near Barstow, and if you take the time to walk around and explore the exhibits and buildings, you can get a sense of a real Western town. Across the street is a life-sized replica of Independence Hall in Philadelphia, where the Declaration of Independence and U.S. Constitution were drafted and signed. The Knott's version of Independence Hall has a free historical show that also has that old-fashioned Disneyland feel to it.
This authenticity is eroding a little each year as Cedar Fair tries to emulate Six Flags Magic Mountain and build another roller coaster or thrill ride somewhere on its property, and take out a little bit more of the park that the Knott family had built up before selling out to Cedar Fair about ten years ago.
Another park that I recommend for families with young children is closeby to Knott's Berry Farm. It's called Adventure City, and it's a relatively small amusement park with minimal theming. It has mostly smaller rides for children, but also a miniature train ride, merry-go-round, stage show, and a couple of small roller coasters. Adults and children are the same price, but the cost is lower ($13.95). You see a lot of birthday parties held at Adventure City.
