As I understand it (and I'm not an expert on it) the reason for saying "people with disabilities" rather than "disabled people" is that the "people with disabilities" one is more in keeping with the social model of disability - that the people are not inherently 'disabled' (which the second one would imply) but that they are disabled by society/ the barriers society places in their way.
However, that also depends on the disability - for example I've heard someone in chronic pain saying that it's the pain that disables them and it's got _bleep_ all to do with society.
Also, I think that many "people with disabilities" would reserve their distaste for people using more offensive terms, rather than saying "disabled people" instead of "people with disabilities".
From ectoplasms link before it says the term 'invalid' should be used as this means 'not valid'. Fair enough, I understand the term is seen as offensive, so I wouldn't use it, but if that's the reason, then surely 'disabled' means 'not abled' and implies 'switched off'. Can anyone explain why one term is ok and the other one not?