I think you can make a case either way, and the decision should ultimately be what you, in clear conscience, feel you should do before the Lord. But I wholeheartedly support the celebration of Christmas.
In the Old Testament, God instructed the Jewish people set aside special days to remember things (like the Passover). The Jewish people were apt to forget the work He had done and He wanted to give them times to set aside as “special” and remember what He had done. In the same way, it’s easy for us to take lightly or forget about things when they become mundane. One point I’ve heard in against celebrating Christmas is that every day is a day to remember what Christ has done for us through His birth (and death and resurrection) and that it’s not wise to take a pagan holiday to celebrate Christ’s birth.
The truth is, we take other things and redeem them, even though they may have pagan roots. We use technology that has been invented by unbelievers; we don’t reject the use of that technology. We take movie genres and redeem them for Christ by creating Christ-glorifying films; we don’t set the whole film idea aside because it is “pagan”. There are many things that we take part in that may have pagan roots were we to search far enough, but that doesn’t mean it can’t be redeemed and used for the glory of God. (note: I’m not promoting that anything can be redeemed for God, as there are certain things that we commanded to not take part in, such as witchcraft)
Unlike Halloween, Christmas is not regarded as a pagan holiday by our country. While people may focus on Santa Claus, presents, and the elements of Christmas that are not about Christ, most people know that Christmas, in essence, is about the birth of Christ. Celebrating Christ’s birth on December 25th is not somehow violating the holiday by attempting to twist it into something it is not. Perhaps you may refuse to put up a Christmas tree or give gifts, but that doesn’t mean you can’t honor and celebrate Christ’s birth on the day our nation has set aside at Christmas.
Ultimately, you shouldn’t choose to celebrate (or not celebrate) Christmas because everyone around you is making that choice. You shouldn’t make your decision based off of what others are saying, but what God has led you to do. If you feel like you can best honor Him by setting aside Christmas with its pagan roots, you have the liberty to do so. But if you choose to take the holiday of Christmas as a time to remember how Christ humbly came to earth, born in the lowest of places, to redeem sinners such as you and me, I believe you can in right conscience do so.
“Christmas now means that we mark, in Christian ways, the birth of Jesus Christ. I think the birth, death and resurrection of Christ are the most important events in human history. Not to mark them in some way, by way of special celebration, would be folly it seems to me...Let's just take it, sanctify it, and make the most of it, because Christ is worthy of being celebrated in his birth.”
John Piper, Should Christians Celebrate Christmas?