Hmm... tough call. ; I think it sort of depends on what KIND of dining you plan on doing and what kind of plan you'd be considering.
If you're going with the basic plan, you'll still be paying for one meal per day (probably breakfast). ; And you also get one 'snack' per day (that's a lot of snacking, I think, considering the size of meals).
You'd know best how much food your kids would eat... and how they'd eat it. ; If they're more of the 'portable food' kind of kids, instead of the '3 square meals' kind of eaters, then you might be better off making an off-site trip to a grocery store and stocking up on portable nibbles and just budgeting for limited meals. ; If they're going to want to do Character Dining, or you're going to want room-service (not including pizza), then you have to consider that you'll use up more of your food allotments booking those (or 'dinner show' options).
For us, it wasn't worth it. ; But we had also booked a concierge level room, which comes with a certain amount of food availability. ; I think we actually had a proper lunch maybe twice in our week at WDW... apart from that we stocked up on items available at breakfast (concierge level stays include, generally, breakfast offerings like cereal, donuts, coffee, tea, juices, fruit etc. and afternoon snacks. ; Depending on the hotel, it may also include pre-dinner appetizers and after-dinner desserts and sometimes afternoon tea) and then grabbed something from the afternoon snacks to tide us over 'til dinnertime. ; But we're two adults with very strange eating habits, so we know it's not for everyone.
I've seen some 7 year-olds who can put away almost as much as an adult in terms of things like counter-service combos... but in other cases, a 7- and 5- year-old could probably split one counter service combo and still be quite happily full.
I'd suggest reading about the meal plans and what they include, and then think about your family (you know you & yours best). ; Sean and Minnie have put together a decent list of restaurants at the various parks and how much you can expect a meal to cost per person at each of them as well as what kind of service and food offerings they each have. ; There are also resort restaraunts to consider, and generally each resort has one restaurant in each category (counter, moderate table service, and then a slightly pricier option that's a little fancier).