My take is this:
You might as well let the child decide for himself/herself what to "believe" with regard to fantasy/mystery. This will prepare them for the inevitable. They are going to face lies and liars many times in their life. The sooner they learn to distinguish a lie from reality the better. And it's not really that Santa or the Easter Bunny are lies to children, they are fantasy, or pictorial of some mystery of life. Who can explain to a child the concept of charitable giving or sacrafice and not wrap it in some mysterious illustration to make it easier for a childs mind to grasp. The same holds for God and Satan and Demons. Forcing your kids to believe is fruitless. Let them work it for themselves and you will be teaching them to think critically and allowing them to use their own imagination.
I wouldn't recommend any one treatment of the Santa or God issues. Each child is an individual and needs to be respected as an independant thinker. True, as little ones they have less knowledge and are liable to believe in things that are unreal and rediculous from the standpoint of someone older. At some point in their life the timing will be right for them to dispell the illusion and swallow some more reality. That will keep happening all their lives until eventually they get used to digesting the mystery of life for themsleves rather than leaning on the opinions of others.
For some kids Santa will be real for a time. For others he will not. For some Christmas will have a meaning and will compell them to act in some way in the spirit they percieve to be behind the Christmas tradition. Some will never understand even the spirit of Christmas and refuse to participate in what they see as a "lie" and forced behavior. The same can be said about God in our tradition. Kids will ultimately believe what their own experiences have shaped them to believe. What we believe in really does not change the reality of things does it? But it does affect how we live and how we treat other people. So, I would say it's important to explore the mind and personality of your own children and help them work through the mystery without telling them what to believe. Then support their ideas as long a they are making good decisions. Direct them as needed to correct obvious blunders that could end up hurting themsleves or others. But allow for fantasy and imagination as a tool for building the psyche of the young child in preparation for adult life where they will most certainly need the skill to sort out fantasy from reality.
Too much psycho-babble right? All this to say let the kids decide as you help them learn how to use their own brain. Don't ever lie to them but allow room for fantasy and help them learn to distinguish the difference.
Sean