Hi A.!
I've had an Element for the last 4 yrs. I liked mine so much that quite a few of my friends bought one too! Gas mileage is great (I have a 4 cylinder) much better than other SUV's. I especially like that there is a lot of leg room in the back - may times I will change my toddlers diaper there on the floor, especially if I'm in a place where the changing table looks dirty or if there isn't one available. You sit up high off the road which is nice and your child will enjoy the stadium seating in the back - very good for children who tend to get car sick! Great for groceries, strollers, etc. EASY cleanup if you get the plastic floors (some of the newer models have carpet now so I'm not sure which one you were looking at...) They hold their value too, so pretty good investment as far as vehicles go. There is also a plug for your Ipod or mp3 player which I really enjoy. Also, keyless entry is a lifesaver!
Downsides - These are just things that I personally find difficult, they may not be a problem for you:
Because there is so much room in the backseat it is difficult to pass snacks, cups, coloring books, etc from the front to the back. Also, you must open the front door to get into the back and in tight parking spots I found myself twisting and maneuvering to get my son out without hitting other cars. That's about it!
I lease my Honda and my lease is just about up so we just purchased the Kia Rondo - only because I need more seating in the back (we're planning on having more children and I carpool with friends a lot) I really wish the Element had three back seats!
It sounds like it will be a good fit for you - have fun!