I was in Amsterdam for Xmas and New Years last year...it was excellent.
The weather was fantastic the 10 days we were there. Woke up to snow one morning and rain on another day but outside of that the weather was very tolerable. Comfortable for walking around with slight periods of some sun, clouds, wind, drizzle...typical Amsterdam weather.
Xmas is definitely less touristy with new years being a little more busy but what do you expect. I highly recommend a new years eve in amsterdam.
Everything is open except for Xmas day in which a majority of things/places were closed, with the afternoon becomming more busy, but we still managed to find plenty of places that were open. Coffeeshops and clubs and bars are all open and there are plenty of people walking about.
Didn't have any special Xmas restaurant experience to speak of and I didn't see any festivals going on while we were there. I would recommend the outdoor ice skating rink near the Rijks and Van Gogh. It is near here that I did come across some street decorations. I can't remember the street(s) but this street does contain some of your extreme high end shops(i.e. gucchi, armani, that kind of stuff)