We did do the "cry it out" method and it worked out fine. At the time i was stressed out, clinically depressed and extremely sleep-deprived and my over-1yo just would not got to sleep and stay asleep. He needed to nurse every time he woke up, which was 3-4 times a night. There is no way a 1yo needs to eat every 2 hours in the middle of the night! he didn't nurse that much in the day time. We tried everything. Finally our ped told us to try letting him cry--BUT--only do it if we could stick with it and not give in.
We made a calm, rational decision and started it on a Friday night. He cried and cried. We cried and cried. Nobody slept. The next day, he went down for a nap easily, but we made sure to wake him so he could sleep at night.
Night #2--he cried and cried--for about 15 minutes, then slept.
Night #3--he whimpered for less than 2 min, slept through the night, and never had another problem(with sleep, that is).
The interesting thing is, as he began to regulate his own sleep at night, his daytime naps became more restful and easier. He finally "got it."
I do not regret letting him cry it out. It did not have any lasting consequences. I learned from this to not rock and nurse my babies all the way to sleep, as much as I enjoyed it, but to always put the baby to bed while he/she was drowsy and sleepy. My 2nd & 3rd babies did just that and neither ever had any problems sleeping (and we didn't have to do that dreadful "cry it out" ever again!)
Cathy--still likes to rock my three delightful, well-adjusted kids, 18,11, & 9