If he will be 26 months in Jan 08 does that mean he's 11 months old now? Impossible to tell what he'll like when he's 2 then, but many 2 year olds like the costumed characters at WDW and Universal (though some are terrified of them). He may like stuffed animals now, but he might not like real animals on Kilamanjaro Safari or the Pangani Falls Exploration Trail.
Why either/or? Do both - Disney parks and Universal parks. I always do both. Each is unique and has different attractions to appeal to a wide range of tastes. Despite what laceemouse said, IOA is definitely NOT "almost all thrill rides"; there is an entire land devoted to Dr. Suess, plus additional kid-friendly attractions in Jurassic Park and the Lost Continent (kids love the interactive talking fountain).
Now I'm going to don my flame suit, because what I'm about to tell you is going to offend the bezeesus out of many parents, but the whole world does not revolve around your kid. You're talking about a vacation for five people. The boy will be old enough to enjoy the trip (some people think a 2-year old is too young to enjoy Disney, but that's bunk). He won't actually remember much of it, but your pics and stories will make it a special time in his mind as he gets older and he'll want to go back.
But to stage an entire vacation completely around what you think a 2-year old might want or need leaves the wants and needs of the 4 adults completely out of the picture.
No matter how precious your little one is, he is still just one member of your family, and your family includes the other 4 people on that trip. I recommend striking a balance - figure out things for everybody to do, otherwise you will wind up with the grans sitting around all day bored out of their minds while you wait in line for the kiddie rides and characters.
WDW is specifically designed to allow everyone in the family, of all ages, have a good time both together and apart, so I suggest that while it's important to keep the little one's needs in mind when planning, you should not plan the whole trip around him.
Rides, shows, parades, restaurants, swimming, golf, shopping shopping shopping - WDW and Universal have it all. Don't spend your whole trip watching the little one ride Dumbo and the Carossell over and over again.