S.P.
I would stay at the Waterpark - that way you don't have to worry about driving, and the admission to the waterpark is free. If you stay somewhere cheaper, it will probably end up costing the same after you pay for the waterpark. Plus, you generally get to go into the waterpark an hour before it opens (fewer people) and you don't have to worry that you've forgotten something or need to run back to your room for a second or for a nap. :)
Places like Great Wolf have zero depth entry pools for the little ones. Most of them also have playgrounds in the water that your three year old will enjoy. I think some of them have day care services for your infant, too, if *you* want to actually be able to play.
If I remember correctly, Great Wolf is only open to people who stay at the hotel. We have gone to Kalahari (great), and Chula Vista (my favorite of the three we've gone to). We've never gone in the summertime, so we've always been at indoor parks - but in September it still may be warm enough for outdoor parks.
Have fun!