There's an interesting article on Wikipedia about the origin of the term "Xmas"
en.wikipedia.org/wiki/Xmas
Foremost, Teana is absolutely correct about its origin. Centuries ago, the symbol "X" was synonymous with Christ. I believe all of the misplaced hullabaloo comes from the pronunciation of "Xmas" versus "Christmas". This being my opinion after doing some reading, Xmas was never intended to be pronounced phonetically in our language. Xmas should be said like Christmas, and not like "X"mas. I think that trend is what causes very religious people to be upset. It sounds as if others are making light of what is very important to them.
And I apologize if I step on anyone's toes with this last remark, but it just strikes me as though some of these religious people believe they need a cause. I just wish they would take a moment to educate themselves first.