"If you think the Santa thing is LYING, then do you let them read fiction? because on that basis, that's all lies as well. Narnia, Neverland, Wonderland, Grandpa in my Pocket- just a big pack of lies!"
I can see what you mean, but I think it's very different. I'm not planning to tell my DS that Santa is "real", because I remember how disturbing I found the 'fib' as a child.
Your parents tell you that they love you. They teach you that cat is spelled C.A.T. They teach you that your heart pumps blood around the body. Then they tell you that Santa brings you presents with a sleigh, and also a magical baby was born in Bethlehem and was the son of God. You trust them to give you the absolute truth because you have no other way. You place all of these facts on the same 'plane' of truth.
Later you find out that Santa was an out-and-out pretense for your amusement, and as far as baby Jesus being the saviour of mankind, they say "Oh, we sort of believe it. Well, not literally. Well, we went to Church once... some people believe it. It's a cultural thing."
Perhaps I was just a very dull, serious child, but the appeal of this was lost on me.