Are we better off getting him a UK passport to enter the UK or will he be fine entering on his NZ passport? He will be 16 months old at the time we arrive.
You're surely better off with a British passport, but you will probably be fine without one. I assume that you or your partner was born in the UK, that you are both listed as parents on the child's birth certificate, and that your UK place of birth is reflected in your UK passport. This is enough documentary evidence to establish that your child is a British citizen, which means that your child is exempt from immigration control and has an unrestricted right to enter the UK. This will satisfy the UK immigration officer.
The other thing to consider is the airline. They will be satisfied by your child's New Zealand passport, which allows visa-free access to the UK.