Christmas decorations go up right after Thanksgiving I believe.
As others have already said, the weather can be good for shorts or you may need a jacket/sweatshirt or both outfits the same day.
We've been 3 different Christmas trips now. Dec 25-31 at the Swan 2002... Dec 27-Jan 3 at BCV in 2003... Dec 19-24 BCV and 24-29 VWL in 2004.
We REALLY like staying at BCV and walking to Epcot and the Studios in the nice weather. We had a great BCV 2BR Epcot view of Illuminations and the special Christmas add-on and we could hear the music from the balcony. We added the extra days at VWL in a 1BR (after my parents left) at only a few months out. At both, we had a small tree with "built in" lights that we covered in the rainbow Mickey head ornaments from the DTD Christmas store. We had also brought the lighted garland for the balcony and one of those inflated "Santa" Mickeys to put on the balcony as well. It was cool to see Mickey waving at passing busses, boats, etc. when we were returning to our room.
VWL were nice for something different... but DD17 and I agreed that we prefer our BCV and OKW.
As for crowds... this is what we noticed:
1. Before Christmas... crowds best of the three trips, sort of crowded, may have been same number of people as June... but they weren't as hot and grouchy

, MK most crowded
2. Between Christmas and New Year... Christmas Day pretty crazy in the MK (we only stayed long enough for our early lunch at Liberty Tree Tavern... which was fabulous) and it rained on us... a lot; other days there is a noticeable build in crowds towards New Year's Eve... there are something like 3 bowl games within a very short distance of WDW and it seems that a lot of the half-time cheerleader/dancer girls make a day-trip at some point, we saw a football team going onto RnRC, school banners were hanging out the windows at the Y&BC. NYE is VERY crowded... get somewhere early and stay there... we picked the Studios because we wanted to see Sorcery in the Sky (fireworks only shown NYE and July 4th).
3. New Year's Day and later... crowds thin out a LOT... NY Day - between the hang-overs and the bowl games, it just isn't as crowded; for the next few days things clear out... BUT, the special Christmas stuff (Candlelight Processional, etc) is over; there are still decorations up, but some of them aren't quite as "fresh" as they were over a month ago
Soooo to make a long post longer, we decided we prefer to go the week before Christmas... and it doesn't hurt that points are lower then than they are the week between Christmas and New Year... after New Year they go down a lot.