We were at WDW Decemer 24-January 1 last Christmas. Yes, it was crowded, but easily manageable with fast passes and the inclusion of less popular attractions. The only day I wouldn't do again is New Year's Eve at Magic Kingdom--WAY TOO CROWDED! Like 75,000, at capacity, crowded. On the contrary, it was a ghost town at Animal Kindgom New Year's Day.
We're planning a Christmas 2006 trip, so obviously to my family, a few extra people in the parks won't deter us!