I've been to WDW with our family 2-3 times at Christmas break. We enjoy it very much--but you have to have the right attitude. Going to WDW at this time and hoping to avoid people is like expecting to avoid people at the shopping mall on the Saturday before christmas--it's not going to happen. However, if you go with the expectation that it WILL be busy, and you know what's ahead of you, you can have a magical time.
The crowds are huge, and typically, the parks and/or parking lots are closed to new guests as they reach capacity in the middle of the day. Words of advice: Stay on property--it offers you the most flexiblity and the least amount of transportation hassle (this doesn't mean there won't be any--I've been in many a traffic jam and on my share of packed WDW busses before). Make lots of plans ahead of time--including meals, because there's very little room for spur of the moment or walk in dining. Don't wake up in the morning and spend 2-3 hours deciding what park to go to, where to have breakfast, how to get to your destination, and where you're going to eat lunch. Know these things ahead of time and decide as a group so no one's surprised. Arrive Early--the parks usually open at the crack of dawn, leave during the day to nap and recoup, return in the evening and stay till the bitter end--the parks also stay open very late (exept AK which still closes at dusk) and you can usually walk right on to anything you want.
The plus is that when the parks are packed with guests, they are also packed with cast members. The rides/attractions run at full capacity, there is very little closed for rehab, and the guests/cast members are generally on their best behavior. Disney also pulls out all the stops when it comes to the little "extras" of a visit to the theme park. Lots of street performers, side shows, characters, decorations, and other little surprises around every corner. The trick is to STAY RESTED and be patient. If you are well rested, you won't be as crabby, and the hustle and bustle is kind of fun.