melpomeme I don't think your analogy is quite right - every child can tell the difference between a stuffed toy cat and a real cat, so I don't think you are ruining any illusions there. Same goes for plays - it is the fact that they know (or are reassured) that it is make believe that allows them to enjoy The Gruffalo on stage (otherwise if they thought it was real it would be mighty scary).
I think the right analogy is something more like telling someone how a magic trick works, telling them the end of a movie or book, or telling them what is in their present before they open it. A policy of total honesty and disclosure ruins the mystery of the trick, the suspense of the movie and the surprise of the present.
FWIW i don't claim to my kids that i have any special knowledge of the physics of Santa, or can communicate to him about who has been naughty or nice etc...I think all that can get a bit creepy. The lie I do tell though is that a deny all knowledge of how the presents (stocking fillers, socks, chocolate, satsuma etc..) got into the stocking and who eat the carrot etc..(and maintain plausible deniability with different wrapping paper etc...) without that bit of play acting the whole stocking business seems pointless.
If you don't 'do' Santa then why bother with the charade of the stocking, carrot, whiskey etc...?
I have told my children there is no such thing as god, so we don't then go to church, pray etc... (we do celebrate a secular xmas though tigitigi - just like i'm sure we'd celebrate Chinese new year if we lived in China).