Be aware that the break even point on the TiW is $350. You have to spend $350 in OOP items in order to break even on the $75 cost of TiW. If you'll do that with all of the trips you'll take during the time you have TiW then it's worthwhile. If you're not sure then you may be throwing money away. TiW is optional. We have had our APs since mid-June 2010 (upgrade of our MYW tickets that we bought with a free dining package). We'll be buying TiW at the beginning of our upcoming February 2011 trip. It didn't make sense for us to buy it during one of our previous trips because of how we eat when we had a dining plan (we rarely order alcohol or appetizers or anything OOP; basically we paid for 2 breakfast TS meals). You really need to think about how YOU tend to eat at WDW in order to determine if TiW makes sense for you.
Your dining plan credits are not affected by the upgrade of your MYW tickets to APs. Your tickets will be removed from your KTTW card but your credits should remain there. There have been some reports of credits getting messed up but this can be corrected at your resort's front desk or Guest Relations. Personally I'd ask the CM to verify your credits before walking away from Guest Relations with your APs.