We haven't been on a
Disney Cruise, but we did take our 4 and 2 year olds to the parks last May. I'll speak to our experience with the 2-year-old since that's the age range you're asking about.
The 2yo loved so many aspects of the parks! Seeing the animals in AK was a favorite, as were splash pads throughout the parks and the various dance parties. She enjoyed all the rides she was tall enough to go on, including Barnstormer. We didn't keep her up late enough to see any of the nighttime shows, so no input there.
We did have to either take a break in the afternoon or let her take a stroller nap, which was to be expected. It was a good chance for everyone to feel refreshed!
I think the resort you choose makes a big difference at that age, too. We stayed at Caribbean Beach, and the pool was a BIG hit. They have a toddler pool reserved for little ones that was so fantastic. Both kids loved it and I liked that I could just wade in with them while they splashed around. CBR also has a shady playground the kids enjoyed.
Personally, I'd go with parks + resort. I went on a non-Disney cruise as a teenager, and even I got antsy to get off the boat! Motion sickness can also be a concern. I've never had issues with motion sickness on cars or rides, but I did get vertigo and headaches on the cruise ship. It would be awful to have a sick toddler on your hands on a cruise!