I should start out by saying that this activity is best done with a class that gets along fairly well and runs reasonably smoothly. If you think that there's any possibility of bullying or hurt feelings in the class, you might want to try something else, or alter the second half of the activity.
First, I start out by explaining one big holiday custom we have in the US - writing letters to Santa Claus. Children write letters to Santa that tell him all about what a good boy or girl they've been this year. If Santa approves, the children get lots of presents! But if they're bad, they get coal, which is probably an unfamiliar word so I show them a picture of a lump of coal. I try and show them lots of pictures of Santa, children writing letters, and Christmas presents to help get the concept across. I tell the students to think about all the good things we've done this year, and maybe if we all write a letter to Santa, we'll get what we want!
I write a sample letter on the board as an example. Like:
I have been a good boy this year. I helped many students and cleaned my room every week. Please give me a new iPhone and a Porsche 911. Have a Merry Christmas!
I write the bolded parts in another color of chalk to show that those are the portions I want the students to fill in on their own. You may have to alter the grammar of the letter based on what the students have studied. For example, "I was a good girl this year" or "I want a..." Of course, if the students want to write anything else in their letter, they're welcome to do so. It can be funny to give them a choice as to whether they were good or bad and explain why. At this point I give the students 15 or 20 minutes to write their letters. It's good to go around the class and see how individual students are doing and help them write what they want to say.
Once the students have completed writing, collect everyone's papers. Mix them up a lot and pass them back out to the students face-down, telling them to keep a secret about whose papers they received. Make sure nobody receives their own paper.
Now the fun part comes in. Tell them that they are Santa, and they can read this child's letter and choose what kind of presents they'll get. I write a sample response on the blackboard, such as:
You were a good boy this year. I'll give you a new iPhone 5 and a Porsche 911 model. Merry Christmas!
Then the students can write their responses as Santa, choosing what their classmates get for Christmas. This is the step where you have to be careful if students seem likely to say unkind things about each other if they're writing anonymously in English. You might want to remind them that Santa is a jolly and kind character. If students want to rib each other and give each other coal, it's fine as long as they can take the joke. If you still feel worried about it, you can just do this step yourself after class instead of having the students write as Santa.
Once the students have completed writing, I collect all the papers again instead of asking the students to deliver them to the original writer. I then pass out their letter to each student and say "Merry Christmas!" If it goes well, it's all very funny and the students learn about another aspect of American culture. You can substitute "naughty" and "nice" if you think those would work better than "good" or "bad."
Also, note that I made the paper for B5-sized paper. If you want to print it on a full A4 sheet, I'd recommend resizing the page size in Word and adjusting the layout to compensate.