I am somewhat offended when an employer tells me to be sure to say ONLY happy holidays in the interest of not offending anyone.
Bingo! I say Merry Christmas unless I know for certain the holiday isn't celebrated, although honestly, the only people I know who don't celebrate it at least in a secular way are Jehovah's Witnesses. Jewish, Muslim, Hindu, Pagan..doesn't matter..you try telling your kids they're not getting a stocking.
On the other hand, if I lived or worked in an area that had a large population of people of other religions, I would probably choose to say Happy Holidays, just cause its easier.
So I say Merry Christmas but am not offended at *all* by Happy Holidays. But I am offended by the lack of any religious symbolism tolerated in the workplace.