I co-slept with both my kids, and still do with the youngest (we are preparing her room). I'm totally for it. When they were very young, we used snuggle nests (available at Target and BabiesRUs. We did the crib and cradle with the first and were so exhausted! We did the cradle at first with the second. Because I breastfed, I knew that cosleeping was the ONLY way I'd get rest. I'd nurse in the middle of the night (sometimes fell asleep) and them moved them back into the nest. Finally, they grew out of the nest.
One thing that I found helpful was to put baby between us in the King Size bed and each had their own blanket/sheet. That way I didn't have to worry about one of us pulling the cover over baby's head. My kids are VERY secure and it helped a lot for the toddler terrors in sleeping.
We were ready for DS to move out at age 3. He loves to sleep w/animals, and got a new dinosaur at McDonalds that I wouldn't let him sleep with because it was hard. I told him that if he slept in his new bed, he could sleep with the toy. That did it! Yes, we did have nighttime visits for awhile. Daddy or I then started reading to him, lying with him on his bed, and he'd fall asleep in our arms. Once asleep, we left (he knew it) and made sure the nightlight was on (plus monster spray done). But we always told him that if he was sick or had a bad dream, it was OK to come let us know, then we'd take him back to bed and rub his back to sleep.
With my daughter, who is 3, it's going to be fun. She's so looking forward to her own room. She has been sleeping with her brother when she wants to and enjoys it (as does he). In fact, she told me today as we both needed naps, "Mommy, I don't want to sleep with you anymore. I'm a big girl now!" She was very serious, and I told her we were almost ready (Christmas surprise).
I had a sister whose baby died of SIDS, sleeping in his crib in the next room. I may get flamed, but in looking at stories and statistics, I fully advocate co-sleeping IF IT WORKS FOR YOU. It is your baby. Do what works for your family. We have a great pediatrician, but I don't agree with all of his advice, and have been proven right time after time. It seems that if you compare apples to apples, as far as population percentages that do both, the number of babies who die in cribs (from SIDS or other conditions or defects in the crib, or other accidents, like climbing out issues), is proportionally higher than the number who die in cosleeping. Just take all precautions you can. Evidence has also shown that babies will automatically be in sync with your breathing. Dr. Sears has great supporting info on it.
Oh, and by no means am I saying you need to do it for 3 years. That was our choice, and what worked for us.
HTH. Let your intuition help you with your decisions. Listen to others, but don't always heed. Don't let someone else tell you how to raise your babies. I was the perfect parent...before I had kids.