I don't think it's cruel. I am pagan as well, though I don't disagree with anyone else's beliefs. If you don't celebrate Christmas, that's your thing. If they do it's theirs. Why try to force beliefs on others.
What he has never known, he will never miss.
ETA: I don't blame people for asking you about Christmas, I mean, everyone I know celebrates Christmas. It's just polite small talk. When they say you are depriving him, that is an outright lie.
If it were me, I would just say yes and keep moving. Unless of course it was a friend and not just small talk at a grocery store or whatever.
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