My wife breastfed our children because we were taught it is healthier than formula feeding. I never heard that breastfeeding could permanently disrupt sleep in the baby and mother - but apparently this is common knowledge. However, research presented at the 2011 American Academy of Pediatrics National Conference and Exhibition showed that the sleep disturbance in breastfed babies is temporary.
Researchers gathered data from questionnaires and compared the sleep habits of 89 breastfed infants to 54 formula-fed infants at baseline and at follow up visits at 3, 6, 12, and 18 months later. At baseline, the breastfed infants woke up more at night and were less likely to wake up in their own bed (I guess meaning the mom brought the infant to her room to sleep). The breastfed infants also took more daytime naps than the formula-fed infants. But at the six month follow up, the only difference was that the breastfed infants were less likely to wake up in their own bed. By nine months, all differences in sleep had disappeared, and these persisted for the 12 and 18 month follow ups.
The study lead author said that the results should be reassuring to parents that want to breast feed, but have heard that it can permanently disrupt sleep more than formula feeding. Currently, the American Academy of Pediatrics recommends breastfeeding as long as possible and at least to 12 months.