I have been running into problems finding a tour compnay that will allow a 5 year old to travel. (If anyone know one please provide me with a tip)
I am starting to think that perhaps the best bet is to fly and do our own thing. Book a hotel and just relax and slowly enjoy an island. I imagine that you can island hop by plane ( my God, I hope that doesn't cost too much!)
I have found two hotels that sounds pleasant on the islands. Red Mangrove Inn ( Puerto Ayora)& Hotel Silberstein( Sanat Cruz). Please advise if you have stayed at either.
Please also give any tips as far a tours and ways in which we can do the galalapagos with my 5 year old.
Thanks so much!!

You can definitely skip the cruise and do day tours at your own pace. There are ferry's that take people to each island, i believe it was $30-$40 per person. I met a few families with young kids doing it this way. Hotels/hostels on the islands cost between $10-$25 for a below average to average one, and $25-$100 for better ones. There are restaurants on most of the islands as well.

We spent 16 days on the Galapagos last Dec. with our 13 year old.We opted to do our own thing,spending 9 days in Puerto Ayora and the remainder of the time in Puerto Villamil on Isabela.From P.A. we did day tours to Bartolome and South Plazas.You can also do tours to Seymour and Santa Fe. I'd recommend booking these in advance as they are not available everyday. The boat we went on was the Santa Fe and we had a great crew and guide. The cost was $70-100 depending on the trip.We hired a taxi and went to the lava tunnels and the tortoise reserve in the Santa Cruz highlands.Around town we visited the Charles Darwin Research center several times,the first day we were the only tourists there and the next time was Darwin Days and we got a tour from their Public Relations director.We also enjoyed swimming at Tortuga Bay and Las Grietas.As far as accomodation we only walked by the Red Mangrove and Silberstein ,both looked very nice the Silberstein has a pool if I recall correctly. We stayed at the other end of town by Las Ninfas at Casa del Lago. I would highly recommend it.Elena and Enrique have 2 small apartments with kitchens available for rent.They're lovely,clean,quiet and very unique.We paid $90 .Elena was very helpful with arranging tours for us and full of information about the Galapagos.In the evenings we would walk downtown and watch the locals playing volleyball,the children riding on the merry go rounds and playing on the swings.It was very family orientated and lots of fun.Puerto Villamil was also very enjoyable,smaller and very quiet and relaxing.We stayed at Casa Marita which is right on the beach.Very nice again $90 for 3 of us.You could lay in the hammocks and watch the sea lions and penquins playing in the water right in front of you.I would recommend this way of visiting the Galapagos esp. with small children as you can do things at your own pace.We enjoyed meeting and talking to the local people and we still managed to see and do alot.As it turned out our daughter was prone to seasickness(esp.on the fibra ride to Isabela) so we were happy with our choice.Plane fare from Isabela back to Santa Cruz is expensive at $90-100 one way but it was quick. If you need anymore info just PM me. The Breeze