If it wasn't for the 2-year old I would probably recommend Paris although if you haven't ever been to London then there's certainly lots to see. But I think Paris is a bit much for a 2-year old - except Disneyland Paris possibly, but it's some way outside Paris (over an hour's journey I understand).
Plenty of hotels in London (not cheap, but as you're being treated.....), don't have any personal recommendations myself since it's years since I used one.
Attractions (some more suitable than other for 2-year old): London Eye, London Aquarium, Kensington Museums (Science, Natural History, Victoria and Albert), Madame Tussauds, London Zoo, River trip, Tate Britain, Tate Modern, Shakespeare's Globe Exhibition, National Gallery, Wallace Collection, Tower of London, Tower Bridge, etc.
There are a number of websites which are helpful, for example try
http://golondon.about.com/od/londonwithchildren/
Have a good time.