What are the attractions for Phoenix and Tucson ? I have 2 kids ( 5 and 2 ) - and am planning a trip there early next year.

Any good child friendly hotels to stay in ?

Amerisuites are family friendly. The rooms are inexpensive (you can generally get the best deal on their website or with a AAA discount), the rooms often have a little fridge and microwave, sleep 4, and a breakfast buffet is included (nothing fancy, just basic stuff -- fruit, muffins, toast, yogurt, juice, coffee, etc.)

As far as attractions, do an Arizona search as this has been discussed before.

Have a great time!

We have gone to Arizona several times with kids, and enjoyed it a great deal. However, yours are too young for many of the activities (horseback riding, cave tours, canyon hikes). The desert landscape requires a vigilant eye for young kids not familiar with cactus and snakes. Tucson has a small zoo, a wonderful outdoor nature museum, and some not too strenuous hiking. Phoenix has a good kids science museum; Sedona is a nice place to visit.

As mentioned in Lila's post, you should probably do a search to get a lot more info but here's my 2 cents since we've been taking my kids (now 6 & 8) annually to Scottsdale to visit family since they were born:
In Phoenix, the science center is great as is the zoo. There are 2 animal parks (Out of Africa and World Wildlife Zoo) which are interesting (but they are similar and you only need to do one of them - I prefer Out of Africa). There is a fabulous playground called McCormick Railroad Park in Scottsdale which not only has wonderful playground equipment but also a working carousel and a small train you can ride around the park. There are tons of kid family hotels and restaurants (and that's where a detailed search on this site will come in more handy). Hope this helps!

My kids were older when we were there but in Tucson your kids may enjoy the senora desert museum, it's more of a zoo/botanical garden. Also the old tucson theme park (former western movie studio). DOn't know when your going, but if you go during spring training, there small baseball stadiums in both area where many teams play. We went to the Giants training stadium in pheonix, it's much more intimate than the regular ball parks. Many of the resorts in both areas are kid-friendly. We stayed at the Sheraton El Conquistador in tucson which was lovely. In Scottsdale we stayed at the Millenium mccormick ranch (not as nice of a resort as the El C, but we got a great deal on priceline and was upgraded to a 3 bedroom townhouse).