Hi Amanda,
December is a great month to visit Walt Disney World as it is a truly magical time of the year during the holidays.
My family spent Christmas and New Year at Walt Disney World last year and had a fabulous time.
Whilst we didn't see any of the Disney characters wearing their holiday costumes at any of the character meals, we did at several of the meet and greet areas throughout the parks as well as during the parades and shows.
As far as unadvertised Christmas fun goes, here are some of the not so well known offerings at Walt Disney World:-
1/ Sleigh rides at Disney's Fort Wilderness Resort & Campground
2/ Visit Santa at Santa's Chalet and experience the
Festival of the Seasons at Downtown Disney
3/ Check out all of the beautiful Christmas decorations at the Deluxe Disney Resorts
The Gingerbread House at Disney's Grand Floridian Resort & Spa, the Gingerbread Carousel at Disney's Beach Club Resort and the Gingerbread Tree at Disney's Contemporary Resort are of particular interest. I would also recommend that you make a visit to Disney's Wilderness Lodge as it offers a very traditional holiday feel.
Christmas menus are offered at select restaurants on Christmas Day itself although exact details for 2011 have not been posted at this moment in time.
Wishing you a magical trip!