Tell the truth, kids understand more than you know.
My kids know we don't have money, they are grateful for anything they get. One thing we've done to make it easier around here is they know they only get ONE gift from me, so they don't have expectations for more. If we're able to get more, it's a bonus. Then we have a family gift exchange for a second gift. Each of us draws a name and they have a $10 budget to get something for that person. The kids are more excited to find gifts and see what the other person thinks of thier gifts than they are to actually get ones themselves. The older kids each help a younger one get their gifts and I buy the gift "from" the baby. Since everyone has the same budget, no one gets anything more than anyone else.