I was raised jewish in a not-so-jewish town, so the Santa question inevitably came up. My parents just told me there was no Santa, but don't tell the other kids that because it might upset them. Well, that didn't last long. Santa came up in discussion, I was asked about it since I was one of "the jews", so I just repeated what my parents told me. It wasn't hostile in the end, mostly arguments about how Santa couldn't possibly get into our house since we had no chimney, or how he could possibly get in without setting off our burglar alarm ("He knows all the codes!"), etc. I think TA's idea is probably the best way to go.