I am planning Yosemite trip and don't know which month would be better July or early Sept. I know it would be more crowded in July with families travelling or should we wait until early sept. Thinking July so we could enjoy warm nights outside. Would temperture be very cool early sept.

The earlier you go, the more water there will be coming over the falls.

Early September is usually still warm.

Late June would be better for the water display.

I agree with with Bob, if you possibly can, make the trip in early June when the falls are the fullest.
If you want to rent a two person float and enjoy a leisurely fun trip down the Merced from Camp Curry you should go before September as the river dries up and is too low for float trips later in the year.
In July the falls are still flowing but the crowds will be huge.
The day after Labor Day the crowds will be gone but so will Yosemite Falls as it will have dried up.
The temperature in early September should be quite warm.
Enjoy the beautiful view point from Glacier Point and hike the mist trail
to Vernal/ Nevada Falls.

Personally I love Yosemite in Sept. It's not all about waterfalls, you know!

If July and Sept are your only options - then my choice would definitely be September. Not even close. Much less crowded, and the chance for better weather.

But if you could go in late May early June - that would be even better.

i agree with the thought that any time other than the peak of the summer crush would be best.

September would be my choice too. Although as others have mentioned, the waterfalls will be light or dried up, there is so much to enjoy in Yosemite that I think any time is a great time to visit, but the summer crowds really detract from the enjoyment. In most of California, September is a little cooler than July and August, generally, but not chilly. Bring jackets for the evenning, as you should year round, but the weather should be fine for sitting out.