I wanted to be an honest parent and tell my kids the truth. But I did not go overboard with the truth. Use simple age appropriate issues to get your point accrossed.
I used occasions like when we would see "Santa" at the mall to explain to my 4 yr old that there was also one at K-mart and another at the Store downtown. My child then reasoned for themselves (with a little prompting on my part) how that would be possible. The natural deduction was that they were men in Santa suits.
I sort of also made a point when they were about 5 or 6 to show them a chimney from the inside... and we discussed the probability of a person surviving and being effective if they came and went through the chimney.
But along with the common sense debunking I also taught them a healthy approach to giving. Not just charity, but giving compliments, food, friendship and many other important gifts.
My children learned the traditional "story" of Santa and we colored pictures and wrapped presents and baked cookies. About the time they were 8 yrs old I taught them about other areas of the world and how they do things and I taught them about my experiences as a child at our home during Christmas. And my children grew up with a healthy affection for stories and fantasy. But they knew what was real and what was fantasy.
I still spent too much $ on them at Christmas :)