Interesting, thought provoking post. At first I was a little offended by the well-adjusted, coddled part. But I will say that my DD (an only child, treated like a princess since day 1) probably IS coddled, I can admit it.

Not sure about the well-adjusted part -- she does wonderful in school, treats all adults and her peers with respect, has friends, and obeys our rules. I asked her how she would feel if I went to Disney without her, and she looked at me like this

Then she said, "Seriously, you would never do that, right??? No, Mom, SERIOUSLY, you would never do that, RIGHT??".
You hit the nail on the head with the Santa thing. Kids do not need to know the cold, hard reality of the world at the age of 5. Sorry, that's ridiculous (to a different poster).