The Alakai Hotel and Suites in the Wisconsin Dells offers the indoor and outdoor Hawaiian Village Waterpark designed for children under the age of 8.
The Hawaiian Village Waterpark at the Alakai Hotel offers younger kids two small waterslides, a zero-depth entry pool, and several squirt guns and geysers. The outside pool area includes several small slides and a water play area. Standard rooms can generally be had for $110 or less in the prime summer season, and $50-$75 in the off-season.
While certainly not offering the amenities of a full scale indoor water park resort, the Alakai Hotel and Suites may be even better suited to families with younger children. Located right in the heart of the Wisconsin Dells, this small hotel may be just what you are looking for at a price that can't be beat!