I've been to about 6 drafts and intend on going again this year so here is the low down and some corrections to what has been posted. I was not able to go last year so some changes could have been made.
As a second option, if you get there and can't get in high tail it down to the ESPN zone, we did that one year and it was as good as being there. The place is packed with as many fans, ESPN does some remotes from there, and you can sit down and have a decent meal and drink while you watch on the big screens.
It has not been announced yet what the location is for this year for sure. For years it was at the Theatre in Madison Square Garden (not the main Garden areana) however last year it was moved because MSG was against the Jets idea for a new downtown stadium. Radio City Music Hall has been mentioned a lot (See CBS article in post above) and it could move back to MSG, expect an official announcement shortly.
People get there early but I highly doubt the NYPD will allow you to set up a tent and camp out on the sidewalk. We usually get there by about 6:00 am and have been able to get in every year except one. Like I said I didn't go last year but in all previous years you would line up outside early in the morning and they would give out wrist bands, you then went and waited in a second line were as it got closer they would start letting in the people with wristbands in to get tickets, if you didn't get a wristband then you didn't need to bother waiting. I see bigtyme13 said you could get tickets the night before last year, if so that is new as in the past it was first come, first serve that day and it was way more then 1000 people that got in. I am thinking this might be because the Javitz Center was more limited seating or something. I'll keep my eye out on a few other boards that usually have details from guys in NYC and post what I find as we get closer.
Yes, every true fan should go at least once. If you are a junkie and know a little college football it is even better.
It is free, other then what you spend on food and drink, remember NYC is expensive. Draft usually starts at noon on Saturday but you need to be there in the early AM.