If you can go in the weeks prior to Christmas the crowds are not bad at all - we went Dec 8-18 2006 and it wasn't crowded, alsthough it definately picked up at the end of the week. The decorations and atmosphere are still wonderfully, beautifully Christmas.
Here is a list from intercot.com of some special Christmas festivities (the only one that is an additional admission is Mickey's Very Merry Christmas Party):
The Osborne Family Spectacle of Lights
Disney-MGM Studios
November 12, 2007 - January 6, 2008
Welcome back this popular tradition as millions of lights add their brilliance to the backlot cityscape.
Mickey's Very Merry Christmas Party
Magic Kingdom
December 2,4,6,7,9,11,13,14,16,18, 20 & 21
Join the celebration and make your holiday the merriest with this festive party - the best gift that you can't fit under your tree.
Holidays Around The World & Candlelight Processional
Epcot
November 23 - December 30, 2007
Throughout World Showcase, many holiday legends come to life to share the customs of their countries. Don't miss the Candlelight Processional, an inspiring musical retelling of the Christmas story.
There is also a daily tree-lighting ceremony at Epcot. You can also get preferred seating at the Candlelight Processional with a meal package at an Epcot restaurant - which is excellent if you are planning on trying an Epcot restaurant anyway.
As for choosing a resort, they are all great! I recommend staying onsite and choosing a resort that is close to your favorite park (all the monorail resorts are very convenient to Magic Kingdom and Epcot and easy to get to, to change or rest. The value resorts are a ton of fun and have great bus service. The mods have a great relaxing feel. There are also Old Key West, Saratoga Springs and Animal Kingdom Lodge as well as Wilderness Lodge and a campground. The Wilderness Lodge is supposed to be spectacular at Christmas. Researching them can be a lot of fun and Disney makes doing a split stay easy if you can't make up your mind! Christmas seems to be becoming a more popular time, so determine your plans and check on availability.