The idea of nightcaps as a way to induce relaxation for sleep is nothing new. Insomniacs, in particular, often believe it is the only way they can achieve sleep at all. However, the reality is this: drinking right before bed is not a healthy way to achieve quality sleep. Alcohol may help you to relax so that you can fall asleep, but that's about all the good it will do you. So many studies on alcohol's impact on sleep have been done that there's really no controversy: Alcohol degrades sleep quality.
This probably isn't what you want to hear, going in to the holiday season, where late parties at homes and offices mean plenty of champagne, eggnog, wine and toddies will be flowing. But remember, alcohol is a drug, and one that can become habituated to. Even if one is not alcoholic, alcohol in the bloodstream will still generate a withdrawal response once it has been metabolized by the body.
At that moment, your body will go into withdrawal mode, generally at the time you should be experiencing REM sleep. Instead, hormones and body chemistry shift to stages of arousal and divert the brain from REM sleep.
Why is this a problem? When REM sleep is disrupted, many brain functions like concentration, memory and wakefulness are impaired as soon as the next day. The "fog" you feel during a hangover is an extreme version of this, but even light or moderate alcohol use will shortchange you the important stage of REM sleep and lead to cognitive shortcomings. If drinking alcohol before bedtime is a regular practice, you should expect it to eventually lead to problems with family, work and regular daytime function related to executive function.
Losing REM sleep isn't the only problem with sleep that alcohol contributes to.
The chemical relaxation that alcohol brings can lead to extremely loud snoring, as the tissues and muscles of the upper airway are extremely relaxed, creating resistance (which generates the noises of snoring). You may not think snoring is a big deal, but your sleep partner may very well disagree. Even if you don't have a sleep partner, snoring can rob you of deep sleep and lead to morning headaches and morning sore throats. It can always mark your potential for developing apnea.
If you have issues with obstructive sleep apnea--the partial or complete obstruction of the upper airway during sleep--alcohol will only worsen these episodes, leading to more gasping, choking and coughing as well as poor blood oxygen levels. Hours of low blood oxygen can lead to all kinds of other health problems over time. Apneas also generate arousals, just like the withdrawal affects of alcohol on the bloodstream, leading to more disruptive episodes of wakefulness during the night.
How bad can alcohol be for your sleeping process, then? It depends mostly on how much you consume. One or two drinks consumed within 2 hours of sleep might not show an impact, but more than that, over a shorter period of time, will absolutely rob your body of the sleep it needs.
In addition, alcohol before bed may increase the odds that you will suffer from sleepwalking, sleep talking and episodes of sleep "drunkenness." And for some, the continued use of alcohol can actually contribute to chronic maintenance insomnia, a condition in which one falls asleep, but cannot maintain sleep, leading to strings of sleep deprivation over weeks and months. Older people who drink before bedtime do not metabolize alcohol in the same way as their younger counterparts and may actually have a higher blood alcohol level in their system than a younger person after consuming the same amount--the problem here being that they may become at higher risk for accidental falls, and the problems of frequent nocturnal urination can also be exacerbated.
Even worse, scientific studies now suggest that there's a link between this kind of sleep disruption and cancer.
This is not to say that you shouldn't participate in the consumption of a little holiday "cheer" at your office or neighborhood shindig. Just be aware of the potential for lost sleep and expect to drag the next day. If you have sleep apnea, however, and you aren't treating it, be wary of drinking a lot of alcohol right before bed; those who already have moderate to severe apnea can suffer dangerous worsening of this condition following drinks before bedtime.
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Here's a good overall discussion describing the biological metabolism of alcohol to show you what will happen if you decide to enjoy several holiday nightcaps
For something more detailed and scientific check out this research study funded by the National Institutes of Health.
Finally, the Cleveland Clinic offers this report on Drug and Alcohol Related Sleep Disorders.