I always get tons of questions about Disney's dining plan. Here are my thoughts and experiences:
The dining plan (whether free or not) isn't as much of a bargain as it used to be. You currently have to pay for a 2-day park ticket now (and it has to include either Park Hopper or the Water Park Fun & More option, or both) in addition to paying for our group tickets, and you have to stay at a Disney deluxe or moderate to get the regular dining plan (paying full price for your rooms). You can stay at a value resort and get the quick service plan (paying full price for the rooms) and upgrade to the regular dining plan for an extra fee per person, per day, but that just increases the cost of the "free" dining.
Also keep in mind that the dining plan (whether free or not) doesn’t include gratuity. Meals at Disney restaurants are very expensive, so their gratuity is also very expensive. (In some cases, the gratuity we paid for a Disney "free" meal was the same or more than what we paid for a meal for our family of 5 off-property.)
We did the math and found that we could get our discounted tickets, pay out of pocket for our dining, and come out with a better deal. We've done this for the past three years (after doing the free dining for 4 or 5 years prior to that), and found that we actually ate better, and enjoyed our meals more. Why? Because we could park in the off-property restaurant's parking lot and walk right in, with no reservations, and were seated immediately. The atmosphere was always better - quieter, less hectic, and more leisurely paced. And the food was better than comparable Disney restaurants (the quality and portion sizes at Disney have decreased over the years at Disney's restaurants due to the free dining).
Every family is different, though, so I encourage you to check out your options and do the math. The dining plan has changed so much now that it may not be the best deal for your family, either.