Not for DD's first year, but I did make a book for her for her 2nd year - and had it as the guest book for her 2nd birthday party.
2. Mostly just pictures with a little bit of text on each page.
3. a - I really like how it came out - though for this year, I may start organizing the photos a bit earlier. I was down to the wire getting it done. I am now keeping a "Favorites" folder in each month's folder of pictures so that I can upload more easily when the time comes to do the photo book - as I plan to do it each year. b - I did an 8x8 story book last year and I liked that size in the end, but I *may* try to do a 12x12 one this year.
I believe that you can do pages with more text on Shutterfly. One of my friends did a 12x12 for her DS's 2nd birthday and the last page has a half-page of text with photos on it. I believe there is a "Add Text Page" option (though I just checked and all the text page options allow only one photo. Hmmm....)