We set up our Fisher Price Nativity set for the kids. I am still working on getting mine set up. (Baby's can put a real damper on your schedule each day.) Lorelei is old enough now that she remembers things from past years and she remembered the Nativity set.
We also read our book, The
Nativity Pop-up Book by Francesca Crespi. I highly recommend getting it if you don't already own it. The kids love it and it is really beautifully illustrated and fun to read.
We did a lunch time activity that involved building the nativity on a piece of peanut butter bread using pretzels to make the outline of the house and marshmallows to represent Jesus, Mary and Joseph. (I saw this on a blog a couple years back, but I couldn't find the site to give it credit.) Lorelei used some extra marshmallows for Angels and she used a Cheerio to make a halo on Mary's head. Allan used some extra marshmallows for sheep and put Jesus on top of two Cheerios to create a manger. Charlie thinks the lunch time activity is a lot of fun and if the kids laugh he wants to be in on the joke, so he laughs too.

[...] Make Nativity Peanut Butter Bread Scene [...]