I also wanted to say that this will be our 4th year of Free Dining, and we go over Labor Day weekend & the following week every year. Back in 2005 the crowds were nonexistant, it was so dead it was almost creepy! 2006 was a little higher attendance but really still not busy at all.
Last year I noticed a marked increase in crowds -- I still wouldn't call it "busy" compared to other times we've gone (even January was busier) but definitely more people around. I think we were in MGM on Labor Day last year (or was it the day before?) and the streets were difficult to navigate with a stroller but the wait times were still minimal, many walk-ons, and the crowds dropped sharply the following week. I did notice last year there were a lot less "Magical Moment" certificate opportunities and it seemed like less one-on-one CM interaction due to the higher crowds. Again, it was nowhere near crowded, just more people in the streets & restaurants than in prior years.
I'm hoping that this year attendance will be back down. With the rise in gas/airfare/general cost of living prices, I'd imagine there are less people vacationing in general. Last year the Pirate & Princess Party seemed to draw a lot of people, as did the Magical Beginnings program with the Little Ones EMH's and the Playhouse Disney concerts - those are all gone this year. Of course with the earlier
MNSSHP, who knows?!
I'm also hoping the weather will be a factor - in 2005 there was a big tropical storm sitting just off the coast during our trip and so many people cancelled their vacations, the parks were really empty. We were the only people at the Pocohontas show and got a private showing, they brought the animals down off the stage for us to look at and touch and it was really neat. Long story short (oops too late!) I'm hoping the bad weather will keep people away. The storms can also help cool down those hot hot days making it nice and cloudy which is another plus! Just as long as the storms don't actually hit, I think it's a great time to go to WDW.