Ok So..
1. What you select up front, as far as studio, 1br, 2br ect, does not mean you are locked into forever? With 3 little ones a studio would be fine for now but in a few more yrs yes upgrading to a 1-2br will probably be needed.
you don't select a unit size up front. DVC works as a point system.
so you buy X number of pts and can use those to book reservations.
if you decide to spend the points on a giant 3BR "grand villa" for 2 nights, you can do that. if you'd rather spend a cozy 10 nights in a studio instead, that is fine also.
(only 2 resorts have studios that can sleep 5, though, and realistically, you should be looking at 1BRs or 2BRs, as the studios would be very tight.)
the key is to figure out how many points you need. if you need more later, DVC will be happy to sell you additional contracts (or you can purchase "resale" from a current DVC owner to save money.)
2.So if I sign up with a particular resort I am not locked into that resort choice, but can book at another by transferring to that one?
it's all "based on availability." if you expect to routinely book VGF at 6 months out, that is awfully optimistic.
DVC is easiest if you buy where you want to stay and book there at 11 months out. but if you plan ahead and are first in line exactly when the 7 month window opens, you will typically be able to try other resorts. (flexibility is a good plan, though.)
3.As far as cost, I understand you buy points and use them through the year, depending on your resort choice you will spend more or less points...as far as the upfront cost-you set the amount of points you want to buy + service fees? Do you select how many years you are committing to?
Is the first year typically the most you will pay?-All questions based on things I have heard through the grapevine from others...
Thanks again
DVC has 2 costs.
1) upfront costs. like buying a house, you will pay a certain amount to buy a DVC contract. this is a big pile of money, yes.
here are some resales to get some ideas of how big a pile of money you might need. (prices listed are subject to negotiation.)
http://www.dvc-resales.com/dvclisting.cfm
alternatively, here is a list of upfront prices for DVC direct purchases from disney.
http://www.dvcnews.com/index.php/dvc-program/financial/pricing-a-promotions
when you purchase a contract, you will be the owner so long as you pay annual dues (see item #2 below) until the expiration date for your resort. (or until you sell your contract as a resale.)
2) after you buy a home, you will have additional costs maintaining it. maybe even HOA fees on a regular basis to maintain a community pool and shared grounds or something. with DVC, these are called annual dues or maintenance fees. (you will be contributing to paying for everything from the monorail, to giraffes (if you buy AKV), to housekeeping and lobby staff salaries to buses and groundskeeping.)
you can find annual dues costs and history for each resort in post #2 in this thread.
http://www.disboards.com/showthread.php?t=2823943
you should really scan through that whole thread as it is very useful. it also includes the expiration dates for each resort in post #6.
3) sorta.
not officially a DVC cost, but don't forget that you still have to pay for wdw tickets, airfare/gas, food and souvenirs like mouse ears hats...