It is definitely the best time to be at WDW. The weather is usually nice. In 2006 we hit a cold snap and it was COLD (jackets, pants, scarves). In 2007 it was actually warm and we were sweating (short sleeve shirts, shorts). In 2008 it was warm in the day (but not like 2007) and cool at night (but not like 2006). All the decorations are up. There is so much to do during that time of year. My only complaint is that there is a lot of people there. We were not expecting a lot of people from what we had been told but we have been 3 times during the holidays and every time it is crowded. 2006, 2008 we went the week after Thanksgiving. 2007 we went only for a couple of days 2 weeks before Christmas.
Be sure to check out The Gingerbread House at The Grand Floridian, The Osbourne Family Spectacle of Dancing Lights (DHS), The Castle Lights, Mickey's Very Merry Christmas Party (MK), Candlelight Processional (Epcot), Holidays around the World (Epcot), The decorations at all WDW Resorts.
If you use Disney's Photopass be sure to check out AKL, WL, GF, and The Poly. At these resorts they have a special area set up to get a photopass pic.
They also have a photopass photographer stationed in front of Beach Club.
Have fun. It is truly the best time of year to be at WDW. Christmas was not the same for us not going to WDW Christmas 2009.