When does the Christmas holiday season end for travel end in Andalucia?

I'm travelling there from Dec. 26 to mid-January. I'm assuming I should book all hotels from Dec. 26 to Jan 2 ... but I'd like some freedom to explore as I choose after that.

Is the period Jan 2-Jan 6 still a high time for tourism ... will hotels be packed, or are Christmas holidays over by then?

The person above is correct! Although hotels should start getting cheaper from the 2nd - 6th as most 'foreigners' will have gone home then, but will revert to normal prices after the 6th!

If you are visiting the Marbella area, my mum has a big beautiful 5* standard villa, with pool, great views, and she does Bed and Breakfast at very cheap rates, and will also act as a tour guide, airport collection, etc at very good rates, write to me direct, with some details about yourself if interested!

The last holiday / fiesta is the 5th of January, 'Reyes'.
Hotels can be busy, depending on where you are going, because most tourist hotels are closed for Christmas.
The tourist hotels open for Easter.

Christmas ends on January 6Th, after the Epiphany, so many people are travel ling

The 6th. of January is the last day of the christmas holidays. It is the Epiphany... the day the three wisemen took their gifts to the Christ child, and that is why for centuries the spanish children receive their presents on that day... Father Christmas - Santa Claus was only introduced here in Spain in the middle of the last century.
Now concerning traveling... Most spaniards will travel on the afternoon of the 6th., if they have been visiting family for the holidays, unless it falls on a weekend, in which case they will travel the following day.
Many hotels are packed over the New Years festivities (especially if they have special "promotional packages" for New Years Eve), but by jan. 2nd. they usually return to their normal off-season occupancy, as most of the clients are not spanish. You should have no problem.
I reccomend you visit a few hotel chain websites to see how things are for the season.
Here are a few:
www.ac-hotels.com
www.playasenator.com
www.accorhotels.com
www.solmelia.com
P.S. The 5th. of january almost every town and city in Spain has a "Cabalgata de Reyes" in the evening...This is a parade where the 3 kings "arrive" from the east to bring the chidren their gifts, during the parades tons of candies are thrown to those watching the parade, and the traffic is stalled for a good couple of hours on the main streets... If you can, stay in somewhere and watch 'em on TV...It's not a good evening for traveling!