We did NYE when my kids were younger....elementary school age. We ended up watching the fireworks from an Epcot view room in the Dolphin. They couldn't handle the crowds and staying up late. A few years ago, we spent Christmas at WDW and left just before NYE. Upcoming trip will cover both. I would say at a younger age, spending Christmas in WDW is far more enjoyable to kids than a NYE celebration. Some of the Christmas special events (Parade, Christmas around the world) end just before NYE.
Another thought, you can get the best of both worlds if you plan well. Arrive in WDW just after Christmas, and stay through New Year's. Or arrive to celebrate Christmas, but don't leave until NYE...so you can see the NY fireworks at MK on Dec. 30th.