Santa Claus (also known as Father Christmas, in some countries as Saint Nicholas) is thought by some to be a folk myth explaining the source of Christmas presents given to children on Christmas Day. Conventionally, he is portrayed as a kindly, round bellied, merry bespectacled man in a red suit trimmed with white fur, with a long white beard. On Christmas eve, he rides in his sleigh (pulled by reindeer) from house to house to give presents to children alike. During the rest of the year, he lives at the North Pole together with his elves. One of Santa Claus' reindeer, Rudolf the red-nosed reindeer, has been immortalized in a song which is frequently played at Christmas.
Amongst many adults the nonexistence of Claus is a given, but many young children believe strongly in his existence. A majority of parents, at least in English-speaking households that celebrate Christmas, either actively attempt to convince their children of Santa's existence, or at least keep the source of their children's presents a secret from them and so fail to disprove the myth. Children that believe in the existence of Claus often tend to lose such beliefs by early primary school, as their ability to distinguish fantasy from reality improves and older children disillusion them.
Traditionally, the names of his reindeer are Dasher, Dancer, Prancer, Vixen, Comet, Cupid, Donner and Blitzen. The names were invented in a poem, "A Visit From St. Nicholas", ascribed to Clement Moore, although there is some question as to his authorship.
Historically, one of the first artists to capture Santa Claus's image as we know him today was Thomas Nast, a cartoonist of the 19th century. In 1863, a picture of Santa appeared in Harper's Weekly by Nast. The Coca-Cola corporation has spread the now popular image of a red-garbed Santa Claus. To this day Santa Claus still appears on Coca-Cola products.
Many Christian churches dislike the secular focus on Santa and the materialist focus that present-giving gives to the holiday. They would prefer that focus be given to the birth of Jesus, their nominal reason for the Christmas celebration. It should be noted that the festivities at this time of year are predated by the pagan Yule festivals which were subsumed within Christianity.
Here is a link to an interesting book on the possible origins of Santa Claus: 
See also, Yes, Virginia, there is a Santa Claus.
Thomas Nast along with his fellow immigrants brought the Christmas celebration and a figure, that developed into "Santa Claus" to America . The basis for Santa Claus was Saint Nicholas of Myra.
For the Dutch it is quite clear where the term Santa Claus comes from. It is just a degeneration of the Dutch word "Sinterklaas". Sinterklaas, or St. Nicholas, is a Dutch festivity for children. St. Nicholas is an exclusively Dutch thing, the Germans do know about it from a historical perspective but Holland is the only place where it is really celebrated still. For small children St. Nicholas eve is more important than Christmas (yes the Dutch celebrate Christmas eve with Santa as well, but it is more for the older children and grownups). On the evening of each 5'th of December St. Nicholas celebrates his Birthday, which is actually on the 6'th, by bringing presents to every child which has been nice (so in practice to all children). St. Nicholas, wearing a red bishops dress including a red bishops mitre rides on a white horse over the rooftops of houses and is helped by his countless helpers, which have charcoal black faces and colorful Moorish dresses which date back two centuries, they are called 'zwarte pieten' (black peters). St. Nicholas himself has a long white beard, and holds a long gold colored staff with a fanciful curled top in his hand. Each year St. Nicholas arrives by boat from 'Spain', and is then paraded through the streets of the town he arrives in (in actuality in each town in Holland as well) welcomed by cheering children. His black peters throw hands full of candy and very small specially made hard cookies into the crowd. The children welcome him by singing traditional St. Nicholas songs. St. Nicholas also visits schools and shopping malls. In the weeks before the 5'th of December children can put their shoes in the hallway (traditionally before the stove) with a carrot or some hay in it for St. Nicholas horse, in the evening, and will find a piece of candy (a piece of marzipan, an animal made out of sugar or a chocolate frog) in their shoes. Traditionally it was said that Black Peter would enter the house through the chimney, which also explained his black face and hands, and would leave a bundle of sticks (called "roe") in the shoe instead of candy when the child had not been nice. Children are also told that when they behave very badly they will be put into the sack black peter carries the presents in and will be taken back to Spain.
At the evening (or late afternoon) of the 5'th of December children at home sing a song and suddenly the doorbell rings, and when they go to the door a gunny sack full of presents is found on the doorstep. Alternatively (some improvisation is often called for) the parents 'hear a sound coming from the attic' and then the presents are 'found there. Typical presents include the first letter of the child's name made out of chocolate, a figurine of St. Nicholas made out of chocolate and wrapped in painted aluminum foil, and colored marzipan shaped into fruit an animal or some other object. Also popular are coins and cigarettes made out of chocolate.
St. Nicholas eve has a long history. When Christianity was first introduced in the Germanic countries it took over several of the ancient religious festivals and 'christianized' them. One of the festivals was one that was held for a god dedicated to 'sailors, children and whores'. Well the first and last dedication did not do so well in the eyes of the new Christians, and were discarded. Also to make the point clear this 'god' was replaced by a Christian symbol, the bishop. Later a legend (created or otherwise) was used to strengthen the symbol. The bishop of Myra (in Turkey) was invented which supposedly had, among other things, brought back to life a few children which where murdered, cut to pieces, salted and put into a barrel. Because of this 'miracle' the bishop became an official saint.
When the Dutch still owned the land that later became New York, they brought the St. Nicholas eve legend with them to the America's. However without the red mantle and other symbols. Sinterklaas was Americanized to Santa Claus, and was at first pictured as a thick bellied Dutch Sailor with a pipe. Coca Cola invented the red Santa Claus as an advertisement stunt (red being the 'Coca Cola Color') and it caught on. The horse was converted to reindeers and a sleigh. The 'politically incorrect' black peters (which are in fact Moorish slaves) where converted to elves, and in an attempt to move the origin of the festivities away from their pagan background to a more Christian one the date was moved a few weeks to the celebrated day of the birth of Jesus, Christmas.