OP -- We were there last year the week between Christmas & New Years. We spent New Years Eve in Magic Kingdom directly in front of the castle. I actually cried with the music and the most amazing NYE fireworks I have ever seen (in person) that completly surrounded you it was just amazing.
The parks... yea.. they were very very very very (x10) crowded. Off & on throughout the week/days various parks closed to capacity and several times they closed to everyone but resort guests (isnt' that like stage 3 or something?) anyway, it was insanely crowded. We still had a fabulous time. We planed & planned... very early mornings taking advantage of EMH...by around 10am or so, it was packed and pretty much stayed that way the rest of the day.
my best tips.
1. make a list of the things you just HAVE to do/see @ each park w/ the most important on the top. Don't expect to complete 1/2 of it, but if you do, that's like a bonus! Yea!
2. get there early... for real. I'm not a morning person, however, I have learned the early bird really does get the worm when you get to disney @ ropedrop or so.
3. eat your meals during off times if you are doing quickservice type meals, and if not, then make sure you have reservations.
4. wear layers and if needed, rent a locker to store the bulky layers until needed each day.
NYE we got to MK(this was our 2nd MK day) before the sun (I don't remember the time) and we knew that we wanted to be @ MK for the fireworks @ midnight... so we knew it was going to be a LOOONG day

We got there, and by 11am had done anything we "wanted" to do. We had a reservation for the kids (4 of them) for the pirates league @ 2:30 so we ate lunch & did some pictures, and then went to the pirates league.. that took around 2 hours or so (and was a nice break away from the crowds) and then the kids did the pirates parade and show.. then we grabbed something for dinner (around 5pm'ish or so) and went and pretty much sat down in our spot that we wanted @ the castle. we had pretty much "run" all week with long days, so we all (adults and kids) were very grateful for the break. Also, there were tons of shows, parardes etc in front of the castle so we were being entertained the entire time. We saw the fireworks @ midnight (very cool) and then went back to our hotel (I was standing on a bus on the way back to POR @ 1:11am on 1/1/11.. that was pretty cool to see on the display...
to me disney (like everything else) is a mindset. I determine I will have a good time (and sometimes have to remind myself repeatedly during the day lol!) and I do. If I "think" I won't have a good time, it seems, I don't. and remember, even if the park is so crowded you don't get to do much at all, you are still in WDW with your family... what could be better? Have a wonderful time on your trip!!!
