hi Xari, as a veteran of the city center who has been here 8 years (and someone who would not trade living in the plaza mayor for the world) let me tell you that you get used to it after a while.
the reason that the center gets soooooo mad packed out during the holidays is becuase this is where all the holiday cheer is

millions of people who live in the outskirts and would otherwise never come into the center flock to us at the holidays.
so, they are all coming to see the holiday stands, decorations, parades, etc... and the population of the center shoots waaaaay up albeit temporarily.
let me also tell you that it is not just the center. while the center is the most congested, others who live outside the center can tell you that the shopping thang is everywhere.
you could always try living outside the center but i am afriad that you would miss living here the other 10 months of the year and would regret your decision.
also, many of the millions who come into the center only at the holidays live all year round in suburbs of madrid. they food shop at hypermarkets like hipercor, carrefour, alcampo, etc... and spend their free time at the many, many strip-malls that have infested the outskirts of madrid over the past few years. personally, if i wanted to see a mall outside my apt. window, i would have stayed on long island. also, the malls and hypermarkets outside the city are just as crazy as (if not crazier than) the city center, go to one on any given late afternoon or saturday and you will see. instead of spending an hour on line at "champion" or "d�a" in the city center, you will spend 2 hours getting to the mall and finding a parking spot and then another 2 hours getting out of there

i have a car and this is first-hand as we had to go to ikea, carrefour and mediamarkt a few weeks ago :lo:
hope this helps you to look past the business of mid nov- mid jan in the center and appreciate what you have neighbor
give me the center any day
saludos,
jer...