Not sure how to prepare a child that old. We told her daughter along the way, who is three about it. We got her used to the idea, and even bought her a baby doll for her the day he was born.
As far as feelings. I'm nervous around babies period. Before my son, I did not hold a child that young. Maybe closer to a year was what I was comfortable holding. We also had a child with special needs, which has me more on edge then I may have been otherwise. But I do not love our daughter any less then before.