Hi, we have been twice. We only had 1 child at the time and they put in a folding bed for him but it was quite comfortable and there was plenty of space. Its possible that they would give you a larger room with 2 kids.
We liked the hotel, although it is a long way from Rhodes Town and the airport. Lindos is close, as is Lardos and both have loads of places to eat for a change of scenery. The entertainment is good, especially for kids - they have a log cabin in the grounds that houses the kids club. It runs 6 days a week, twice a day and they have a little disco in the evening before the main entertainment starts. The staff are all very friendly (apart from a couple of snooty receptionists) and all the waiters and waitresses live locally so you are getting proper greek hospitality, not like some of the hotels nearer the Town who have eastern european staff who are less friendly.
The only problem we have ever encountered is a tendency to overbook, in which case they may try and send you to another hotel for a couple of days. This depends on who your TO is, they do not do it with On The Beach for example, but it used to be rife with Sunstar. The usual excuse is that a german airline has been delayed. Do not accept this. The best way to avoid this is to contact your TO before you go and say that you have heard about this issue and that you cannot be moved as you are travelling with 2 kids. Once they know you are wise to it they should not try it on. If it does happen once you are there stand your ground and make them move someone else. It happened to us the second time. We were moved for the first night over the road to the Maris, but to be honest we were curious so were happy to go along with it for a nose around another hotel which is just over the road.
Despite what I have just said don't worry, you will have a great time. PM me for more details if you want.