We took DD in October at 2 1/2 and she had a BLAST!! She actually sobbed for about a half hour when we got home because she wanted to "go back to my hotel". She loved the characters, and we had to wait in line to meet Ariel at her grotto twice, because she was just enthralled with her. We actually skipped going back to the room for naps, because she handled everything just fine, and napped in her stroller if she did get too tired. The only time she had a melt down was when we tried to take her back and make her nap one day. She wasn't having any of that. We did make it a point to get plenty of sleep at night, even if it meant missing rope drops or the fireworks here and there.
We were on the dining plan too, and the Table Service meals were a nice chance to sit down and have a little break. It really was a wonderful trip, and I would highly recommend taking them at this age. She keeps asking when we're going back to see Mickey Mouse again, and when she can go see Ariel again.
We did do a little prep work before we left. We watched the Disney vacation DVD over and over (she would actually request it) so that she had a bit of a visual. We took her to Chuck E Cheese and made sure she saw him, because that's the only character we could think of close by. And I sat on the computer and let her look at some of the ride throughs of the rides on Youtube, so that she had some concept of riding those rides. We also made it a point to take her to a local theme park last summer and let her ride some of those rides, since it was less crowded, and that way she had a little experience.
Have a wonderful vacation, and take lots of pictures!!
Oh, I forgot, I also picked up a couple of the Sing A Long videos that they have out that were filmed at Disney World. They've got the characters in there in costume, and she enjoyed watching them, and I hoped that she got the idea that they were bigger than the kids and the kids were having fun with them. I found them at Babies R Us.