Oh my GOODNESS, yes, it will be unbelievably crowded. My DH and I spent our honeymoon at WDW from December 22-26 (2003), and Christmas Day was the most horribly crowded day I've EVER seen at any theme park, anywhere. A CM told us that the week between Christmas and New Years is the most crowded of the entire year! I'm not trying to scare you, but you should be prepared.
We were at MK on Christmas Day (never, never again will we do that) and it took us 20 minutes to walk from the front entrance of Adventureland to the front of the castle. Yeah, it should only take like, 2 minutes, but we were literally shoulder-to-shoulder and front-to-back with thousands of people. It was honestly like being in a can of sardines.

DH had to hang on to my backpack straps to keep from losing me in the crowd! We waited in line for rides an average of two hours -- the line for Peter Pan took THREE HOURS.

Fast Passes, which we used as much as possible, were usually gone for the day by 11:00am, so get them ASAP!!
The weather was nice the whole time we were there. The daytime was usually in the 70s (Christmas was the coldest day, I think it was around 60 degrees). I had a light zippered sweatshirt with me, it was plenty to keep me warm at night.
The decorations are totally gorgeous. Disney definitely takes the cake in decorating for the holidays. My absolute favorite were the arched lights in Epcot that were set to "dance" with Christmas music. Amazing!