We were at WDW from Dec 31/00 to Jan 9/01 and again from Dec 21/01-Dec 31/01. (Had to get 2 trips in on those APs, dontcha know.

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To echo Dumbo's comments regarding crowds, on our most recent trip we got everything done we wanted to do between Dec 21st and 26th - I, too, was surprised at how light the crowds were. All that changed on the 27th, though. It seems as if half of North America descended on Florida that day and it was literally wall-to-wall people for the remainder of our stay. With the judicious use of fast-passes and doing minor attractions (my son and I both love "Sounds Dangerous" at MGM) we were able to minimize our waits in line. But many of the standby lines were over 2 hours and the FPs were often gone by late morning.
The year before, it stayed busy until around Jan 6 or so, and then the crowds really thinned out for our last couple of days.
It was nice to see the decorations up for the holidays, but I don't think we'd ever stay between Christmas and New Years again. (It's kind of like shingling our roof - it was an experience to have done it once, but once is enough, thank you very much.)
As Debbie says - if you want to see all the holiday decorations and trappings, go during the first couple of weeks of December. It's one of the slower times of the year, and WDW starts putting up their decorations after US Thanksgiving at the end of November. You could also go in early January, but usually the Christmas decorations and festivities usually end by the first week in January.
- Mike