It's amazing, isn't it, that one imaginary guy can cause so many problems for so many parents? Let's start at the beginning.
Is it ethical to promote a belief in Santa Claus?
You got me. On the one hand, it's a magical story to make Christmas morning more special, and possibly increase your bag of disciplinary tricks. On the other hand, it's creepy to tell your kids there's a strange bearded man spying on them day and night, just waiting for them to screw up so he can sneak into the house while you're all asleep like a criminal and leave them lumps of coal. Which way do you go?
You know, if you liked the Santa thing as a kid, you're probably going to want to do it with your kids. If you didn't, you might not. It also seems that the more religious people are, the less interested in Santa they are, but I don't have a huge sample size for that assertion. (If you want to leave any data points in the comments, go ahead.)
So how do you deal with Santa if you don't "do" Santa?
I think a lot of it depends on your reason for not doing Santa. If you're not Christian (either religiously Christian or culturally Christian), you can just tell your kids it's a Christmas thing and therefore not part of your tradition. Do you tell them it's something Christian kids believe in but that isn't real? It's your call. You could also say that he comes to the houses of kids who celebrate Christmas, if you wanted to, but then you'll probably have to come up with some consolation prize for your own kids (hence the rise of Hanukkah as a gift-giving extravaganza out of proportion to the actual importance of the holiday). So it's probably best to say that he's something people who celebrate Christmas believe in, and leave it at that.
For religious Christians who don't do Santa, it's probably because they want the focus of the holiday to stay on the birth of Jesus, not the commercial aspects of the hoilday and near Santa-worship that American culture promotes. It's completely appropriate to tell your kids that Santa is an idea that people like to think of, or a game that people play at Christmastime (calling it a game neatly sidesteps the issue of whether Santa is a lie or not). That segues nicely into multiple Santas being part of the game. You can also get your kids to keep quiet about Santa for other kids by emphasizing the game aspect of it. Gift-giving is easily managed by having the gifts come from the parents to the children, or doing other traditions like St. Nicholas (December 6), or having the gifts come later, from the Three Wise Men/Los Tres Reyes Magos (because they brought gifts to Jesus) on January 6.
When and how should you tell your children there's no Santa?
I don't have direct experience with this with my own kids, but my guess is that eventually, your kids will figure it out on their own. The Santa Myth isn't like the facts about sex, so it's not really going to hurt them if they find out about it from someone other than you. I think I'd just stay alert to how your kids talk about Santa, and when they start putting feelers out about him.
Also, ask yourself why you feel the need to perpetuate the game past the point at which they've figured it out. If you want to keep up the fun, it's just as much fun for you and your kids to be playing the game of Santa Claus as it is for them to actually believe in it because you're desperately trying not to get caught. If you want them to believe for other people, don't underestimate your kids' intelligence. My grandparents thought my brother and I believed in Santa Claus until we were 12, because we kept pretending to. We knew where our presents were coming from, but we also knew we'd get more if my grandparents could pretend they were from Santa. Your kids will certainly understand this game and play it easily, too.
What do I say when we pass two different Santas in the mall?
"Santa can't be everywhere, so he has different guys dressing up like him to talk to all the kids. Then they tell the real Santa what he said later on."
"At Christmastime, everyone likes to see a bunch of Santas, so it's guys dressed up like Santa to make everyone feel happy."
Anyone else with any Santa-related comments?