I'll admit...I have mixed feelings about the Elf on the Shelf. I'm not crazy about the traditional aspects of having the elf "spy" on the child and report to Santa. In fact, we don't really talk much about Santa around here to begin with. But it is SO fun to hide the Elf each night and have Berkley search for him each morning. He seems to really enjoy the little hide and seek game, so we keep the elf around.
Last year we also started the tradition that after Berk finds the elf each morning (last year we named him "Ollie"), he also gets to unwrap a book (mostly that we already owned before). The book doesn't have much to do with the elf, but we have linked the two...he's a literary elf, I suppose.