I gave my DD a lovey that we bought on the day she was born. It was a little blanket about 1 square foot, that had a little rabbit head and arms sticking out the middle. She LOVED that thing! I only allowed her to have it at home, because I didn't want her to need to take something with her everywhere.
Then I lost it. I felt sooo bad! She wouldn't take another lovey, but she got over losing that one pretty quickly. After that, she was happy with any random stuffed animal for the night.
Personally, I LIKE the idea of loveys. I feel that they provide a measure of comfort to small children, who are trying to learn how to cope in this big scary world. My DD, even when she had her lovey, was always an excellent self-soother.
I will say though, that even when my DD had her lovey, she still woke up in the night. She was almost exactly like your son, waking multiple times in the night wanting to nurse.
I stopped letting her nurse, until we reached a certain time. It was tough for a couple of nights, but I flat out REFUSED to nurse her until after 2:00am... even if that meant that I had to hold and comfort her until that time. Then, I would REFUSE to nurse her again until it was time to wake up for the day... Again, even if it meant I didn't get to sleep. After a couple nights, she stopped insisting on nursing. Then she stopped waking up except for that one feeding. After a few weeks, I cut that one out too. :)
I will add that she slept in my room with me... Even after I cut out her last nighttime feeding, she still woke up every night, at least once until I moved her into her own room.