Most children reach the age where they begin to question the existence of Father Christmas. I think it is fine when children ask if he is real to say, what do you think? But I see some parents going to elaborate lengths to persuade questioning children to keep believing.
I think there comes a point where this switches from a nice story to have magic in your children's life, to lying to your children so that as a parént you can enjoy them believing.
I get in terms of things we all do wrong this is fairly minor, but I do think it is better if children are told the truth by parents about Santa when they ask a direct question.