I expect the modern problem with Father Christmas is in part related to modern inequalities and advertising. As a society, children whose parents are struggling to keep a roof over their head will go to school with children whose parents are exceedingly comfortable, and children whose parents buy stuff on the never-never. And comparisons between what Jonathan, Alfie and Fiona got are easy to make, and erroneous conclusions by the poorer children about Father Christmas thinking they were naughty can be drawn.
I personally was brought up always knowing Father Christmas was a story as far back as I can remember, because we were poor. I was also brought up not to declare this to other children, so it astounds me that so many adults find it difficult to keep it zipped around other people's children.
I did believe in the tooth fairy, flower fairies, and that a miniature dragon lived beneath the cooker, and it lived on bits of tinsel. (For some reason, I saw no contradiction between believing in fairies and not Father Christmas.
)
Our own children believe in Father Christmas (so deeply that my husband had to explain last night to son 1 that no, Father Christmas won't be bringing a pink computer for him, as Father Christmas knows he's allowed to use Mummy and Daddy's and doesn't need one) but I do feel uncomfortable talking about it to them, in a way I don't about fairies.