We're using Noel Piper's advent calendar (I don't think they are currently making them, but I hear they are returning for next season) that walks through the Christmas story one day at a time. Will loves it! Kyle and I are enjoying watching him start to understand Jesus.
I have been encouraged by Noel Piper's book Treasuring God in Our Traditions to think about not only holiday traditions, but also developing everyday traditions that help teach our children about Christ. She is where I got the idea of having songs for each of our children that we sing with them before bed. My kids have really responded to a "routine" that we have purposefully placed in our day to provide opportunities for family Bible study, prayer, singing, and memorizing Scripture. That plays out alot in other areas too....like school work for Will and special time with Daddy after work. I would highly recommend this book! I have read it several times and am thinking of getting it out again.
I am still searching out new ways of incorporating the Christmas story in our lives this December. If you have any ideas, I would love to hear them!