We just got back from a Western Caribbean cruise with our nearly-three-year-old on the Carnival Paradise (later I hope to post a message with some other observations). We thought the Camp Carnival program was wonderful and he had a great time -- I cannot say enough great things about it! We took him on all our shore excursions and he was fine. My only hesitation in recommending this for others is that if your child is particularly active and energetic (mine REALLY IS!), the ship is not a particularly hospitable environment because there is really nowhere for him to run and play, and of course all the public areas are crowded so when he dashed off he would usually run into somebody (if any of you folks are reading this, sorry again). Also, I'm sure the railings on all the decks were perfectly safe, but my husband and I still almost had heart failure every time he ran off toward one of them.
You know your child best, and if he or she is not inclined to be so active, I am sure it will be fine. I think the older one will have a great time with all the Camp Carnival activities and shore excursions. Have fun.
-Liz