Just wanted to add my bit as a follow-up to what alloyd1170 said about characters being a bit scary. I took my DD, then almost 2, to DLR last year and she never did get comfortable with the characters that had their heads in a big costume head. The "face" characters, such as the princesses, were OK though. In preparation for our trip to WDW in Sept., I've started talking about eating with Mickey and other characters. I've also told her that the characters are as "big as mommy or bigger" so she won't be totally surprised when they tower over her. When we look at pictures or the WDW vacation video, I make sure to point out that the characters are bigger than the kids, and many "grown ups" - again to start getting her more comfortable with the idea that they'll be big.
In theory, she seems to be OK with this but I'm going to try to hold off on the "full costume"character meals until we've been at WDW a couple of days in hopes she'll see a few at the parks to see them in person before we try to meet them. I have, though, scheduled a PS for the 2nd morning or our visit at PSB since all the characters are of the "face" type.
I think a lot depends on how your child reacts to chracters as well as how tired or wound up he/she may be.