Co-bloggers Eric Posner and Eugene Volokh have written learned, insightful posts on whether or not it is offensive to say "Merry Christmas" or "Happy Holidays" to people who aren't Christian. My own view is that the whole issue is vastly overblown. As Eugene often reminds us with respect to other issues, it's usually a good policy to avoid getting offended without a very compelling reason. There is no such thing here.
Non-Christians shouldn't take offense because some casual acquiantance wishes them "Merry Christmas." It's pretty unlikely that this is a serious attempt at conversion or an effort to put down atheism or non-Christian religions. By the same token, Christians and political conservatives shouldn't take offense if someone says "Happy Holidays." It's fairly certain that this isn't an effort to denigrate Christmas; nor is it PC hypersensitivity. Despite Bill O'Reilly's fulminations about the supposed "War Against Christmas," the position of Christmas and Christianity more generally are quite secure in American society. Just go to any shopping mall or workplace
holiday Christmas party if you doubt it.
There is more than enough genuine religious prejudice in the world that we shouldn't invent bogus reasons to take offense. When it comes to this particularly pseudo-controversy, we would all be better off if everyone would just lighten up.