As for hotels in Penang, you have options of staying on the beach or in the city.
Since you have a kid with you, i would recommend a family beach resort, my favourite one is Shangri-la Golden Sands, http://www.shangri-la.com/penang/goldensands/en/index.aspx
The one in the city and close to cafe, hawkers, shopping and my favourite is Gurney Hotel, http://www.gurney-hotel.com.my/
Cheers and have a good trip.
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For every wound, a balm.For every sorrow, cheer.For every storm, a calm.For every thirst, a beer.