I understand the sentiment, and in theory the idea of adding that 'extra magic' to Christmas is a nice though, but I don't think it's a positive thing to perpetuate...and I think in particular, the younger people of today (the Millennial Generation, a.k.a. 'Generation Me') has proven there is a thing as too much magic.
The whole 'cool guy gives gifts to nice children' was certainly real, and with the Mystery Santa folks we read about in the papers and hear about on the news, it's a copycat tradition still going. However the notion that is often told to children isn't.
Being 'fake', or otherwise not true, not authentic, etc. is something that should be taught to children pretty early on. It is a matter of honesty, and I think when parents are more straightforward and honest, they reap such an investment later because their kids will be instilled with a policy of honesty and be less likely to shirk responsibility and reality when it comes around. By knowing the truth about something, one can often better foresee the likely consequences, and thus I think the same works in children. If they can see that what they do has some pretty clear consequences, and aren't clouded by doubt, they will choose actions that are more likely to be positive.
Being someone who was told the Santa Claus myth, retrospectively I wish my parents just told me the truth so I wasn't confused by the 'middle man'. (Though I must admit, and I'll probably come to regret mentioning this, but...I seriously had to be the only kid in the world
SCARED of Santa Claus. It wasn't because I was a little Hellion, either. So the naughty or nice thing wasn't much of a threat - it was the thought that while I was sleeping some chubby guy was going to creep in on me and look at me, and knew when I was sleeping, and knew when I was awake. When you think about it...not exactly the most merry thing you can establish for your child. So I learned the facts of the matter at a very young age, because one Christmas morning, my parents found me hiding (in the bathtub, I thought if I hid there, he (Santa) wouldn't expect it and therefore couldn't creep up on me) in sheer terror, because I thought the Claus was coming after me, lol, so consider me biased, I suppose....it probably doesn't help that The Nightmare Before Christmas came out that year
)
Where I think the whole Santa Claus (ADD Moment: I was one typo away from writing Satan Claus lol...) is most damaging is the fact that children end up believing, often, here in the U.S., that some magical dude with unlimited resources is going to magically bring a bunch of things that you want. It takes out considerations (2009 and 2010 are good examples of real life making the Santa Claus thing tough...) like recessions, etc. It takes the hard work and effort from the mothers and fathers out there that are doing the work, and throws it largely away, giving credit to the Papa Noel for all of the work.
I would want my [purely hypothetical] children to value the 'be good for goodness sake' in being good to the family, particularly Ma and Pa, so to speak. I'd want them to know that it was Mum and Dad that spent the time and effort (and money!) to get gifts, and I think it has more meaning and strengthens an inter-familial bond which I think is more incidentally compatible with the purpose of the holiday - celebrating/worshipping the Christian prophet/messiah Jesus Christ and his birth. While I'm not a Christian (though I give props for the fella' for his ideas on how humankind should not be a bunch of jerks to each other...), I understand that is the purpose of Christmas, not a Commercialist Gift-Orgy that the Santa thing can become (while I exchange gifts with others during the time that Christians will honour their lord, it is, to me, more of a nice annual gift-giving day - for the sake of being nice and giving gifts to others).
...and, really beyond the points of this Sociological micro-dissertation I just typed out...there is another critical issue to this Santa Claus thing...for those that perpetuate the North Pole thing as part of the 'magic', what's going to happen with the story when the ice caps melt? Santa's wardrobe might not be too appropriate anymore. Unless he starts rockin' out in tanks and board-shorts.