Magic Kingdom definitely has the widest range of stuff for small kids, but a lot of it depends on what your children like. For example, Magic Kingdom has a lot of princess-related stuff, and probably the largest proportion of rides related to old movies. If your kids aren't into the older Disney movies or princesses, you may well still want to spend two days there, but three might be overkill.
Epcot has some great stuff for small children without venturing too deep into the World Showcase. My daughter was 4 years old the first time we took her, and she loved Soarin', Living with the Land (the boat ride), Imagination, and the Nemo ride, aquarium, and Turtle Talk show at The Seas. (We also did the Lion King movie in The Land, but she was bored silly). The benefit of those is that they're all clustered together so you can hit them in pretty quick succession.
Additionally, the Donald/Three Caballeros ride in Mexico is a consistent hit. We've done it at least 2-3 times on each of our three trips (when she was 4, 5, and 6). I'm sure the Frozen ride will be drawing huge crowds when it opens. Nice thing here is that Mexico and Norway are right at the entrance of the World Showcase, so you can still do it pretty quickly. For two of our trips, we schehduled lunch in the World Showcase, so we were basically done with Epcot (at least the best stuff for kids) by 2 or 3, which is still early enough for a few hours in the Magic Kingdom.
Hollywood Studios has, for my money, the best night-time show in Fantasmic. My daughter loved it all three times and talks about it consistently. Toy Story Mania is always popular (as the long lines will attest), and depending on what your kids like there are any number of attractions that might be a hit: Star Tours, the Beauty & the Beast stage show, the Ariel show, the Disney Junior show, Muppets 3D... Many of them are a little dated, but if you're kids like them, they'll probably love the attractions. If they're fans of the newer Disney Junior shows (Sophia, Jake, Doc MacStuffins) consider a character lunch where you can meet them all! (Plus stalwart Handy Manny, for now).
Animal Kingdom has two great shows in the Festival of the Lion King and Finding Nemo, and you could practically spend half a day just trying to time them and the Safari. The Safari Meet & Greet for Mickey and Minnie is probably one of the shortest lines to meet the two of them (although you'll still wait a while), but if your kids like other Disney characters, the Tusker House meet and greet meal is a winner (I think it's usually Mickey, Donald, Daisy, and Goofy, although I might be misremembering). For braver kids, the Bug's Life show is pretty impressive, but it might be pretty scary for little ones. We've never let loose in the Boneyard, but if your kids want to get dirty and play in the sand, this is the place! We've always been done with Animal Kingdom mid-day, but now that it's becoming a night-time park, too, that may change,
In most cases, though, if you're looking at stuff for little kids, the non-Magic Kingdom parks may not be full-day parks. We've used that to our advantage in the past to park-hop or to have an afternoon at the hotel's swimming pool.
Basically, I feel like you can't spend too much time in the Magic Kingdom, but don't overlook the charms of the other parks either.
