First off, I'm not taking anyone's side in this. One of my favorite verses in the bible tells us that we must be convinced in our own minds with regard to our beliefs. That doesn't mean we justify what we want to do by saying "Well, I believe...." and then go about acting any way we want. It means we are to search things out, pray about them, and ask others to get opposing viewpoints; just make sure they can biblically justify their position and aren't following someone else blindly or justifying their own selfishness.
With regard to Christmas, these are things I've used to help me decide about it.
1)There is (obviously) nothing whatsoever in the bible about it, so you have to draw your own conclusions about it using prayer and common sense.
2)Try not to use irrelevant bible verses to justify beliefs about it - as I've said the bible doesn't say anything directly about Christmas, so verses such as Jer.10:2-4, which is often used by people as an argument against Christmas trees, aren't relevant. Jeremiah was not referring to a Christmas tree; this verse seems to be describing a gilded statue, and even at that the bible tells us not to be afraid of them because they (the object) can't do evil or good.
3)As far as people saying it was originally a pagan holiday and that's why we shouldn't observe it, well, the days of the week are named after pagan gods and we don't have a conniption fit about that. Several months also derive their names from pagan gods. There is way more out there that originally came about through some pagan holiday or custom than we can imagine and if we spend a huge chunk of our time fretting about all of it we are really missing the point of living a faith filled life. Don't get me wrong, I don't think you can go about doing as you please, or putting yourself in questionable situations and claim you have the faith to see you through it, I'm just saying you shouldn't go looking for problems. Paul tells us this in ICor 10:27 where he told the believers that they could eat with unbelievers if they were asked to, that they just shouldn't ask whether or not the food had been sacrificed to idols. You could eat the unclean food as long as your conscience was clear because you didn't know it was unclean; the food was not the issue.
I don't see any problem with observing Christmas. I don't worship any pagan gods, so in my opinion it doesn't matter if I'm doing something on the same day someone else is worshiping a pagan god. For all I know one of my kids may have a birthday on one of the pagan holidays, but just because I'm celebrating that day, doesn't mean I'm celebrating that god.
I do think you should consider other people's beliefs. If you know of someone who doesn't celebrate Christmas, don't invite them to your Christmas party. This would certainly fall under Romans 14, but it's also just common decency.
One final thought. Even if you're not worshiping a pagan God, you have only Christmas hymns playing all throughout December, and you attend all the church Christmas programs you can possibly get to, you can still be rolling about in sin with regard to the holiday. If you are so wrapped up in it that you turn the holiday itself into an idol then you are in sin with regard to it. We are all human and tempted to get wrapped up in that kind of stuff because of all the pressure society puts on people, especially at this time of the year. I've missed the point before, but I've also been completely ready to chunk it all on a year when several of my children were sick and one had just had surgery. My focus at that point had to be my children and not the holiday. For the record, we did still have our Christmas dinner that year, but my mom and aunt were responsible for it instead of me. They brought Christmas to our house and stayed to clean up the mess.