as far as restaurants, i would head here:
http://portlandfood.org/. there are lots of lists of must eat restaurants, and the consensus view of that group is pretty spot on.
for toddler traveling in portland, i have a 2 year old and have LOADS of advice. in terms of the inner city, just wandering around weather dependent will get you a few days of fun. if your 2 year old is like mine, tooling around to different fountains, taking buses, streetcars, light rail and especially the aerial tram is endlessly entertaining.
if the weather turns, the children's museum and the zoo are accessible from downtown with a very short rail ride.
if the weather is nice, i would walk the waterfront, hit some fountains (they are almost universally swimming friendly especially for little ones). there is also a little river beach, which my toddler loves at low tide.
the pearl district is very toddler friendly as well, two great parks for kids. one with a huge made for toddler's fountain, and the other with a more natural feel (a little stream, a pond with fish, grass).
powell's has an incredible kids section. hit that.
there are lots of day trips that are worth it as well, the coast, the gorge.
as far as hotels... what is your budget?