We tell our son that Santa Claus 'is' real.  But we give him the straight scoop.  Santa Clause is derived from good ol St. Nicholas of Myra (I presume you see the resemblance in the names), who was a real individual in the fourth century.  The existence of the man is not in any doubt.  That he became known for his generosity for some reason is also not in doubt, though here of course 'scholars' are often dismissive about the reasons.

Saint Nicholas, according to 'legend' was not merely a lovable generous dude, but a fierce defender of the orthodox Christian faith.  I learned from something in college that at the Council of Nicea he got in a fist fight with one of the supporters of Arianism.  My kinda guy.  :)

At anyrate, I am seeking to avoid two extremes in my approach with my son.  On the one hand, I don't want to lie to him, or have him grow up disappointed (as I was, and many are) to find out that Santa 'is not real.'  ('is not,' perhaps, but it's not true to say 'was not').  On the other hand, I don't want him to grow up vulnerable to the silly argumentation put forward by skeptics that one grows out of faith in God like one grows up out of belief in Santa.

That is worth explaining.  What the real story of Santa Claus means is not that the whole thing is untrue, only that St. Nicholas left such a mark at the time that numerous stories spread about him.  Over time, the basis for the stories has become cloaked to us, and we can't be sure which of the stories are true and which aren't.  

Properly speaking, I expect my son to grow up out of his MISCONCEPTIONS of Jesus, God, and Christianity, just as others grow out of their misconceptions about 'Santa Claus.'  No one can be blamed about having misconceptions about anything and everything as a child, even things that they are given the straight scoop about.  It takes awhile for all the dots to be connected and some sort of coherent worldview to take shape.  This applies to gravity, healthy eating, how to treat dogs, Santa, and Christ.

So, I tell my son the truth about Santa- the whole truth- not the dismissive snide skeptical version- but the version which is actually rooted in reality.  Some day, if he really wants, he can examine the basis for the historicity of Nicholas of Myra just as he can examine the basis for the historicity of Jesus and the basis for Christianity.

So, I tell my kids about Santa, and I explain to them the obvious reason why the generosity of Nicholas is linked to the generosity of God.  I take the middle position, which is where I think the truth almost always lies, anyway, and reject the extremes.

Your thoughts?