I also had a bad "Santa" experience growing up.
We were Jewish, but we did Santa, and Santa has nothing to do with God anyway so I don't guess it matters what religion you are to do the whole Santa thing.
Anyway, when I was around 7 years old I found out that our parents did the Santa thing and there was not a real Santa Claus. I told my 5 year old sister and my mom got mad at me and spanked me. I guess she thought I was being mean and trying to spoil Santa for her, but I felt like I had found out and was telling a neat secret or something and I remember being shocked that I had been spanked for telling the truth.
And, I did equate Jesus with Santa. I thought that all Christians were brainwashed by their parents to believe in Jesus and be good so they would go to heaven instead of being bad and going to hell just like you had to be good to get presents from Santa and if you were bad you did not.
As an adult, I was Christian when my oldest dd was born and I did not do Santa with her at all.
But, when my son was 3 or 4 years old, I was selling Discovery Toys and we were selling "Peef" the Christmas bear and book http://www.puzzlestoysandmore.com/IB...rchy/0401.html
and I got them and read the book to my ds for a few weeks before Christmas and then put the bear on his pillow at Christmas and he totally believed that Santa gave Peef to him and he loved that bear and thought it was so special (and his sisters each got one too, but that did not seem to bother him). Then the next winter DT had Peef in the catalog again (we don't anymore) and my ds saw it in there and realized that Peef was a Discovery Toy and not from Santa, but he was not upset about it - although he was a bit suprised, it did not bother him. It was fun and kind of magical for him and he is so easy going it did not bother him at all. I did not do that with my youngest dd though. I think it would have upset her to think Santa existed and then find out he did not.
I guess it just depends on the child how they will take things.