Are you talking this year or next year? As in December 2009 or December 2010?
For either year, YES, it's really busy. Probably the absolute busiest week of the year.
We went that week a few years ago, and I couldn't believe how crowded it was...and we usually travel in the summer or on March Break, 'cause I'm a teacher, so I'm used to peak times for a visit. Picture "downtown Toronto, Union Station at the peak of rush hour" level crowded, and then double the number of people and add a metric ton of strollers for good measure.

And I'm really not exaggerating all that much. At Epcot on NYE, we actually left before dinnertime, because we couldn't stand the press of people anymore. There were literally people on all sides, and you just got moved along by the crowd. I have never seen so many people in all my life. I don't think I'd ever go back that week...likely not even if they offered me a free trip...that's how crowded it was...
BTW, if you're talking this year and haven't booked yet, you may find it tough to get rooms. And, even if you do, likely most of the restaurants are booked up, especially for NYE...