Actually, this Happy Holidays business is barely a blip on the screen. In searching Google's database of more than 5 million books, Digits blogger Jennifer Valentino-DeVries found that the phrase Merry Christmas was used over Happy Holidays by a 17-1 margin.
True, the usage of "Happy Holidays" has seen a much larger proportional jump than that of "Merry Christmas," rising about 200% from the late '90s through the early '00s. But it's still a blip compared with the Christmas juggernaut. Strangely, "Merry Christmas" had seen a decline in literature from about 1940 to 1960, when it began a steady upswing. And one other interesting tidbit: Apparently, we started capitalizing the "merry" just after 1900. Google's tool is case-sensitive, and "merry Christmas" was more popular than "Merry Christmas" until then.
In my own, quite unscientific observations. I've noticed that Merry Christmas is being used more frequently this season, even in parts of L.A. where boring nondenominational greetings are the rule.