I can only speak for lunch. We went last Sept after my girls begged me to go since we had been to Disney 4x already - and they had never eaten at the castle (I assumed that since they weren't "into" princesses they wouldn't want to go).
The food - which was chosen from a limited menu - was okay. Princess interaction was great, though. Each one came to our table, Jasmine, Snow White, Belle and the Fairy Godmother. Cinderella was downstairs near where you check in.
There are no princesses in the dining room at dinner (my friend just returned from there - and verified this).
So if you MUST go - I wouldn't spend to much time worrying about getting a breakfast reservation. For us - going at lunchtime served the purpose.