I don't see the problem, personally, provided that children are taught the true meaning of Christmas... the celebration of the birth of Jesus.
Why? My 2 year old son understands Christmas (at least as much as any 2 year old can), partially because of the decorations we've put up and the teaching opportunities they've presented. I've relayed the story about the teaching opportunity a nativity set presented in a previous thread. The Christmas tree? Every morning, he comes down the stairs and points to the star on top of our Christmas tree with the joy only a child can have, "There's the STAR!". Every morning, my wife asks him why the star is there... and explains to him that the star is a reminder that God placed a star in the sky to mark the birth of Jesus, which the magi followed... Most times, he can answer the question himself. As for the gifts? Surprisingly, he doesn't seem to care much. He's more interested in GIVING them than receiving (again, reference the previous thread where I posted about his response to Operation Christmas Child).
I guess what I'm getting at is this: the "traditions" of Christmas, in and of themselves, have little or no value... but when used as a teaching tool and a reminder of why we celebrate Christmas, they're more than worth it, and in my opinion, are certainly not inappropriate for church.
I know many beg to differ. To those of you that do? Lighten up a bit and allow yourself to find ways to use those things to bring the focus of Christmas back where it should be: Christ! My personal opinion is that a LOT of the things we oppose on grounds of right and wrong in regard to our faith are a lot like the issues Paul was addressing in Romans 14.
My apologies in advance if I've offended anyone by my comments. This Christmas, to date, has been more meaningful to me than any in my 28 years here on earth, not only for the joy I see in my son's eyes because of Christmas, but also because of the strong focus we've made on its meaning as a family in order to ensure our son grows up with the correct understanding of Christmas (thankfully, he appears to be getting it so far!). Perhaps, because of this, I'm a little bit overzealous in wanting others to experience what I have thus far.
Anyway... that's my take. God bless!