We use the 'Santa IS real' philosophy in our home... but a little differently. We tell our three boys:
First stage: You'll believe in Santa Clause
Second Stage: You won't believe in Santa Clause
Third Stage: You'll BE Santa Clause
It helps them understand without lying, but let's me take advantage of child hood fun... and helps the older two be considerate of the youngest, who is still in his 'first santa stage'
Fyrflygrl!