Is telling children Santa is real and other similar stories ethical? If so, why? If we as a society are taught not to lie, why are we telling our children magical stories and building up these characters as myths only to break their hearts once they are a certain age?
I'm going to expand on my comment given that there are no other furnished answers to this question.
Children are born intelligent and capable of reason; they are not however born with the knowledge that will allow them to reason using that intelligence.
What that means in practical terms is that their ability to reason about the world in which they live, and about the choices of those who share their environment (most relevant to this question) forms cumulatively as they gather knowledge, information and concepts that can all be integrated into their world view.
You can't teach Quantum Physics to a 2 year old because that knowledge is based on a massive foundation of cumulative knowledge and specific language (including mathematics) that the 2 year old doesn't possess yet. You CAN teach basic Newtonian mechanics because it's not so far beyond the existing knowledge foundation in the mind that the reasoning will sound like non-sense. This is part of the reason why we still teach Newtonian Mechanics in schools, even though they are completely replaced by relativity; they're simple enough for young minds to understand, and they give good enough answers that they can be seen to 'work'. It's only later that we teach children that Newton isn't 'real'; that his work has been superceded by Einstein and others as Special and General Relativity.
Add to that, there are some concepts we want to introduce to children when they're more ready for them; like human reproduction. This has a lot more to do with social mores than ethics, but it's become an quasi-ethical position over time because we all universally accept the need to do this. In this case, when questions like 'where to babies come from?' we end up using myths like Storks as a placeholder or metaphor that we can build upon later.
In these two examples, one can say we've 'lied' to the child if you want to take a literal interpretation. I prefer (and this is my opinion) to think of it as the introduction of metaphors that allow the introduction of complex concepts gently to a young mind that has to be nourished rather stifled, and can build these metaphors into its world-view in a manner that can be refined (not corrected) later.
Santa (in a similar vein) is a concept or metaphor for life that a young mind can understand. It's not about whether Santa Claus is real or not, or even whether there was ever a historical figure on which he is based. It's not even about whether Christmas is even a legitimate Christian holiday and where Santa would fit into that. I see Santa as a metaphor for the benefits of integrating with society.
What the Santa 'myth' effectively teaches children at a subliminal level is that if you're good, good things happen. If you're bad, bad things happen. This is not about being good once a year; Santa is watching ALL year. The point of this (before a child can understand it) is that behaviour is integral to acceptance in a society that needs him or her to conform to a basic set of rules.
You can't go around hitting other people. You can't go around smashing other people's things. You have to obey the directions of those with responsibility (parents, police, etc.) when they need you to. Beyond that, your life is your own to live.
Explaining that all to a young child is incredibly difficult without a fun, bright metaphor to dress it up in. Children need imagination and enriched stories to make sense of these things first up, and can then (once their world-view is sufficiently developed) synthesise the real intent behind these metaphors.
Sure, you can screw it up by INSISTING that Santa is real when a child brings you the logic that shows he can't be real; the devil is always in the detail but the key point here is that if you introduce it correctly and work with a child's individual level of development, it can be a very powerful tool in directing a child's correct development.
In that sense, teaching about Santa is only different to teaching about the Stork or even Isaac Newton by degrees. Look at every child individually, make sure you only introduce the metaphor in a way that can be built upon later (rather than contradicted) and be true to your own morality in doing so, and I don't see that it violates the ethics of not lying to children.
As in all things of this type however, the matter is subjective and one should make up one's own mind on the morality of this kind of decision.