Definitely bring Santa to church! I teach that Santa got his start as St.Nicholas, which is true. Then I introduce the children to my favorite Christmas decoration, Santa kneeling in reverence to the Christ Child in the manger. To me that puts everything in perspective for both the children and the adults. Then I read the story of Santa and the Christ Child. You can't ignore Santa, so teach the children where and how he fits in with the birth of Christ.
When you live in a place where it is Christmas year around, and the official North Pole Santa is a member...yes Santa should def be in church
I teach children that Santa is fun, like Bugs Bunny is fun. Jesus is real, like you are real. They tend to understand that.