In 2007 we did Christmas Dinner at Liberty Tree Tavern because we had heard that that was a must-do. It was back when it was a character meal, and that part was fun, but the food was less than impressive.
In 2008 we did a late dinner at Narcoosees at the Grand Floridian and it was wonderful! We had a table along the windows and could see the castle across the water. The Electric Water Parade (don't know if thats its actual name) floated by right in front of our window.
I would try to get the castle (if possible) if I was going to eat anywhere inside of MK for Christmas dinner. Otherwise, I would go to one of the nicer restaurants on the monorail.
Also, like a previous poster mentioned, MK is packed on Christmas. The past two years, we went to the park early, rode a few rides and then went back to the resort to rest. Later on in the day the crowds have subsided a little bit and its more manageable in the evenings, at least thats how it seemed to us.