Hi, Jennie,
We go to WDW and USO/IOA yearly. Although my kids (9, 6, and 2) love both, I think you're probably better off with WDW. Your 1 yr. old will definitely be happier at WDW. Also, I've been to Orlando in December when it was colder than Oregon! Universal is a good park for the summer when you appreciate getting wet on the rides; it's a lot less fun on a cold day.
I do have to say that I think USO/IOA is a better deal than WDW. The Universal hotels are very nice and you can get great rates on them. Also, nothing beats the front-of-line privilege extended to resort guests.
If you're trying to stay on-site, I find WDW resort suites to be very expensive. I always stay in deluxe hotels, but I'm too cheap for WDW suites. However, look into the cabins at FW - I've considered those before. YOu may also want to consider getting two connecting (not adjoining!) rooms at the value resorts. I've never done this, but I understand that you can get a better deal renting points from DVC members for one of those properties. If you're staying off-site, there are lots of good options. Be sure to visit the hotels forums. I've stayed at the Holiday Inn Family Suites before and I would recommend it. I had friends who stayed at the Vistana before and really liked it. Post on the WDW Resorts and/or the off-site resorts forums and you'll get lots of info.
WDW is beautifully decorated in Dec. - I'm not sure about USA/IOA.
I think you've made the right decision going to WDW. However, if you're still debating your decision, make sure you go to the Universal/IOA forum. You'll find plenty of info about visiting with smaller children.
Have a great trip.