I'm in my first year doing Arabic and Islamic Studies at Oxford and I basically agree with what Anatheme said.
If you apply for Arabic with French or Spanish as you said, it doesn't come under Oriental Studies anymore, but European and Middle Eastern Languages. This means that on the Arabic side of the course, you only study the language in the first year, without any literature/history/religion etc. You also would only have tutorials in the European language. Then you go away in the second year, to either IFPO in Damsacus or Cairo and then when you are back, the course becomes more flexible and you can choose which of the languages to focus on.
However, in the 3rd year, you would have to take a compulsory paper in Literature, Islamic History and Islam along with the language papers and your choices. So if you hate literature, you've can't avoid it here.
If you chose to do Arabic with Islamic Studies, or with a subsidiary (Middle Eastern) language, in the first year you do an introduction to hist/lit/Islam and have tutorials in these areas.
I agree that there isn't much emphasis on speaking at Oxford, but then that's what the year abroad's for, and I think, from speaking to others, that having it in the second year is an advantage. Sure, you won't be as good as others from SOAS/ Manchester or wherever to start with as they have had an extra year of Arabic than you, but apparently if you have the self control to get out there, make local friends and completely immerse yourself, then you can come back highly proficient.
Also, at Oxford in your 3rd and 4th years you read literature in Arabic, read historical sources in Arabic, read the Quran in Arabic etc etc since you've had the year abroad to get good. I think that effectively having an extra year where you can use the language as a tool can only be a good thing.
I think Cambridge is more flexible, but I'm not sure that this is entirely a good thing. I have enjoyed getting an introduction to Islam, Islamic history, literature and culture in the first year and now feel in a better position to make choices when I come back from my year abroad, since I've had a taste of many different areas. I didn't think I would enjoy literature at all but have probably enjoyed that part of the course most so far...
Please feel free to ask any more questions you may have about Oxford. I'm sorry I know very little about other universities so I can't really help in that way. Good luck!