Great America CAN be a fun place for both of your kids, depending on your younger child's height! My daughter just turned 5 and is about 41". She can go on quite a few of the kid rides at that height. Make sure to look at the height requirements on the Great America website - that should help you.
In addition to the rides, the water park is a lot of fun. You can rent a cabana by the wave pool for the day, which can save you from spending all your time hunting for a lounge chair.
In terms of hotels, I have only stayed at the Hilton next door to the park. It is a great experience for us. The Marriott and the Westin are nearby, too. If you need a bit more room, the Embassy Suites is about 2 miles from the park across the freeway. We stayed there once and loved it, but now that my daughter is older, we like to walk to the park from the Hilton and save on parking. Also, the Hilton is often offered on Hotwire
My best advice is to go early and beat the hordes of teens and groups that hit the park about noon. They are not usually open late, so unless you plan on going multiple days, I would not advise a mid-day break at the hotel.
Please feel free to ask specific questions!
