We like Fantasmic and we make an effort to see it every few trips, but we wouldn't dream of missing Illuminations! It's just about our favorite thing at Disney World.
There's just something magical about standing along that World Showcase railing and hearing that incredible music with the torches lit and all that energy and atmosphere. It gives me goosebumps every time. It's just an essential Disney World experience for us.
Fantasmic, at this point, we can take it or leave it.
I know this doesn't make much sense and it's totally an emotional reaction, not one based on anything concrete - but, to me, Illuminations feels much more like being a part of something - like you aren't just watching, but participating. Fantasmic, on the other hand, just feels like passive entertainment. Wierd, I know, but that's always how I feel.
(And, by the way, my little guy really likes Fantasmic. He's seen it at 12 months, 18 months, 26 months, and 30 months - and he's never been scared by it. However, he actually loves Illuminations, too. He always dances, claps, and oohs and aahs through the whole thing. It's the highlight of the trip for him!)