I teach a mixed year 1/2 class...as for what the children are taught, we do the topics from the year one curriculum in year A and then the following year do the topics for year two in year B, and then back to the beginning, therefore all children are taught all topics on a two year rolling cycle.
Obviously work for year ones needs to generally be easier than that for 2's so it is like any class at that point and it is differentiated according to the childrens ability (eg; I have math groups, literacy groups and topic work groups) where on average there are five groups, therefore I usually create three-fur different levelled work for each piece of written work they do, or have 3-4 levels of expectations. Does that make sense? (I only ask because I have a terrible head cold at the moment, and my thoughts are not really coming on clearly!!)
IMO and IME, I see pros and cons to both sides, pros; the younger ones are able to be mre challenged as they see the older ones and what they are capable of, the older ones learn a lot from the "hidden curriculum" by being able to work with and help the younger ones, cons; you can have a wider range of ability than you may have in a straight year group, so sometimes it is difficult for all ability levels to be assisted/challenged on a consistent basis (eg; I have ability levels in my class ranging from children still working at a nursery level to some of my children are working at a solid level 4!)
A lot of schools with mixed year groups do "setting" which means if there is more than ne class in the year groups, they mix them up for certain subjects, so for example, in my school, we do this for phonics, maths and sometimes science, where we split the kids into higher, average and lower acheivers and put them all in a class in order to give them the support/challenges that they need. Again, pros and cons to doing this, as some will say, well how are the lower acheivers suppose to have something to look up towards if they are surrounded with the same.
Basically, I think no matter what you are going to find pros and cons to both sides, so you just need to think whether one set of reasons outweigh the other for each of the schools! Make a list of both...always helps me! HTH!