The only disadvantage of waiting is that if the IL's know about the vacation, they'll be arranging their schedule around it. So the later you wait the more offended they'll be.
The scenario-- you tell them in May that they aren't going... The MIL immediately goes into a tyrade about how she's already turned down party invitations for that week (yes even though it's months away) and put a vacation hold on the mail and found a kennel for the dog and bought three outfits for the trip... all of which may or may not be true but she'll stick to her story... and then she'll say "when did you decide this? You're still mad about Cabo aren't you? That's really mature, to hold a grudge this long. You've known for months I wasn't invited and you let me go ahead and make plans?"... and you've still offended her, you can't win. If you wait too long, and yes May could be too long, she'll heap it on even worse, because you led her to believe she was going and waited to tell her otherwise.
If you tell her now, she'll blow up that you're still mad, but at least it will be done.
Probably your best "out" is that since the trip is so far out, to tell her that you might be changing your plans (the economy and all) and for her not to count on the trip. And then drop the subject. That gives you a way out either way- should you change your mind (which I doubt but which will make your DH 'happy') then you can approach her later, or if you decide you still don't want her to go, you can just not mention it any more and figure out how to handle it later on.