My husbands family used to spend every christmas at Disney. I'm pretty sure that if you stay in a hotel on property they will set you up with a tree and everything (if you ask about it). It will be magical!
Just to prepare yourself, Christmas is VERY VERY VERY busy at Disney. The parks do have a capacity and will close to new guests when this capacity is met. This usually only happens the week of Christmas. However if one park is full, you can just go to another park. If you are doing more than one day I would suggest doing Magic Kingdom on a day that is not Saturday or Christmas day, you will probably want to do it the first day, there is the most to do for the kids there and you will probably want to make sure you get in there! So if you are going, make sure you get there at opening to ensure that you will get it. Or don't plan on going until about 4pm when people will start leaving and they will let more people in. If you stay on property there are "extra magic hours" that will let you into hte park before opening and usually allow you to stay late, take advantage of that.
I always think disney is worth it, to me there is nothing more magical, and Disney does holidays like no one else! The Osbourne Family Light Show at Hollywood Studios is awesome, complete with bubble "snow".
We haven't taken our kids to the Very Magic Christmas Party yet, but will most likely in two years. Our kids are only 2 and 4 months and the party is from 8-midnight so I don't think they would be able to enjoy it yet. I'm thinking we can make it work when they are a little older.
We are in DIsney just about every weekend, but because we are there so much we tend to avoid it over summer and duirng the week of christmas and new years. PM me if you have any more specific questions you think I would be able to help you with.