I used to let Lucy fall asleep on me cuddling if she didn't fall asleep bf at that age. I still cuddle her to sleep now and see no problem with it, she resettles herself fine if she wakes up during the night and doesn't wake up when I transfer her to the cot. She will sleep when put in her cot awake when my gf looks after her, so I guess she's not dependant on me (it's probably me who needs the cuddle more than her!). I don't think we've created any long-term problems by doing this.

I have also let her sleep with us when she wakes up with the birds to feed or has a really bad night. Doesn't seem to stop her going back to normal when she's feeling better or it's a different time of the night/morning.