You and your family would have a great time! My husband and I were just there two weeks ago, our 2nd time in 3 years (Dec 28th - Jan 1st), and yes, the parks are very crowded, but doable. We never had problems with rides, restaurants, etc. Planning is the key. We had an itinerary and used it a great deal throughout our stay. Universal and IOA are very festive during the christmas season, decorations everywhere, the Macys christmas parade, grinchmas, and holiday music (with a mix of standard music), playing throughout the parks. During our entire stay there, I would say the most congested time period was NYE night. The parks were loaded with people. Of course there was the NYE festivities going on, fireworks, etc, but once the parks let out, it was crazy! But one thing I did notice, everyone moved right along. Security was at the entrance to the parks guiding everyone in and out, and waiting for a taxi or trying to get your car off the lot was hectic, but our hotel was within walking distance, so we walked, and it was fine. I definitely recommend staying onsite if you can, but if not, Kirkman Road is a definite good spot to stay. There is the Doubletree hotel, Holiday Inn, and Amerisuites.
Go and enjoy it, it was a lot of fun!!!!!!!!! We are looking forward to it again for the 2006-2007 holiday season:jumping4:
P.S. My detailed trip report is posted here at the trip reports forum. We purchased a package with Universal Vacations, and got a pretty good deal.