Well... JMHO....
First of all, I use Xmas all the time. I will refer you to this article:
http://en.wikipedia.org/wiki/Xmas which explains the Christianity behind using the X. Whoever came up with that taking the Christ out of Christmas business is all wet. I wouldn't use it in that case!
As far as Santa and Baby Jesus.... I have a statue that shows Santa with him. To me it is a sweet combination of the two things. It doesn't mean I have to deny either of them but can celebrate both Jesus's birthday and the joys of children's beliefs around the world. Jesus loved the children and I can think of no better way to celebrate than to bring smiles to their faces. Yes, we have gotten carried away but that is a personal decision any family can choose to change. We don't get overly carried away here. I see nothing at all wrong with it and think it is great to bring Santa and Jesus together.