Nikki, Christian my youngest is repeating grade 1 this year and it has done wonders for him. I did have concerns in prep but after speaking to the school principal and prep teacher we decided that it would be better for him to move up to grade 1 with his friends and repeat grade 1 if we still thought he needed to. This way he kept all his socialisation skills improving and the following year when he would repeat, the kids wouldn't be strangers to him.
Christian was a little behind in literacy and speech and now that we are drawing near to the end of the year you can really see the difference. For his second year of grade 1 the school kept him with the same teacher so he had a feel of continuity in his schooling and also she knew where he was from the year before and has been able to give us valuable reports on his progress. He has now become a lot more confident in class because he has heard what the are learning before and is grasping it all well. He is also offering help to other students so they look up to him a bit.
Hope this helps you.