The crowds should be great. Most of the Christmas decorations will be up when you arrive, but down by the time you leave. If you are especially looking forward to seeing a particular place decorated for the holidays (e.g. Wilderness Lodge, Grand Floridian) I'd head there very early in your vacation.
The weather is VERY variable. Last year we wore shorts and T-shirts a lot earlier in our trip, but the year before was much colder. Our January strategy is to wear the T-shirt + sweatshirt + polar fleece + windbreaker/rainjacket combo on the coldest days, and to remove layers as needed. (And yes, we have needed all of those layers PLUS light fleece blankets for the kids in order to watch Illuminations). On that trip we had to scrape frost off the car windows with serviettes - turns out Florida rental cars don't come with a snow scraper! The cold weather has never stopped us from having a great trip, though.
Hope you have fun!