Every year at Christmas time I hear Christians denounce the use of Xmas. Even as a child, I was told that when a person uses that term, they are crossing Christ out of Christmas. Many people think it is a modern secular conspiracy to eliminate Jesus from the holiday.
Since the early church, Christians have been using the X (Chi) symbol in place of Christ in many ways, such as spelling Christian as Xtian or Xian. The abbreviation Xmas actually comes from English speaking Christians who were well educated in Greek.
The early Christian church also noted the similarity of the X to the cross, which made it an even better way to shorten Christ. It's like using a cross in place of His name, as opposed to using a C as in Cmas. (Some scholars even think the cross that Jesus died on was X shaped and not the T shape we think of.)
Although it's not considered the formal way to spell Christmas, and you wouldn't want to use it on your Christmas cards, it really isn't as bad of an abbreviation as many Christians think. So don't worry when you see Xmas. Even if people are deliberately trying, they still can't eliminate Christ out of Christmas!
Wikipedia has a good discussion on this subject: http://en.wikipedia.org/wiki/Xmas