My three sisters and I would get our pictures taken together with Santa, up through high school. We never *really* believed, but it was fun.

As for my 3 year old, we're telling her it's make believe, like princesses and fairies, and we plan on setting out cookies and carrots and hot chocolate for Santa and his reindeer. I think you can do both, play pretend and still be honest with kids. I'm so excited for this year, because it's the first time she's really understanding what's going on, both in a religious sense, and the 'candy, cookies, santa' sense. It's lovely.