Just echoing what lots of others have said. We talked to DD1 about DD2 when she was a bump - we always called her "baby sister", so it was like she "belonged" to DD1. We used to talk about what baby sister was doing in my tummy (DD1 was 2 at the time and usually said baby sister was playing ball or eating grapes!!!!). Sometimes DD1 would talk to her as well, or sing to the bump. Very cute! Nearer the EDD, we went to the lovely posh toy shop in Broadway and DD1 chose a toy for the baby, and we bought DD1 a present from the baby when she wasn't looking. We wrapped the present for the baby up together, and let her stick stickers all over the wrapping paper, etc so she was really involved.
I had an emergency cs, and the hospital got closed for a noro virus outbreak, so only partners could visit, so the first time she met the baby was at home, when DD1 got home from nursery. We put the baby in her moses basket, with her gift for DD1 under the basket stand. When DD1 came in we said "who do you think is in the basket" and she was so excited squeaking "baby sister!!!", then we said "look under the basket, baby sister has bought you a present!". She has adored the baby since that moment really!!!! We then sent her to get her present for the baby, and she was very proud to give this to her. The first time my DH picked up the baby and sat down with her, DD1 said very tragically "That's my daddy!", but we just showed her that daddy could have both of them on his knee. He has been squashed by them ever since really.
DD1 did want to hold the baby a lot (still does, now DD2 is 18 months!), and we did let her do this - just made sure she was well supported sitting on the sofa with us next to her, so it was safe. I think if we had not let her do this, she would have been really upset.
When the DD2 was small, she did cry a lot and sometimes it did upset DD1 because she literally couldn't make herself heard (even when right next to me!), but a cuddle really helped, a story later, and honestly there seems to be little that can't be cured by a sticker!
Sorry for the long post - seem to have gien you my life story...
Good luck x