Hi meidei. In Israel Christmas is celebrated by the Christian Palestinian minority (and all the pilgrims, I suppose). Nazareth is one of the Christian centres of the Holy Land, and definitely the most important for Christmas, the city is kinda decorated, they have a big tree and the lights etc etc:http://www.youtube.com/watch?v=a0pAXoPCFr4
I suppose that also Jerusalem is kinda abuzz under that period.
As for Hannukah, well, my religious Israeli friend did celebrate it, but he comes from the diaspora even though he has lived BaAretz for lots of years now so I don't know if he's an exception or not. I should ask my secular Israeli friend what he did.
I had no doubt that in Japan it's just a commercial thing
an average Japanese is born Shintoist because the birth cerimony is nicer, then they get married as Catholics because it's more romantic, and they die as Buddhists for the same reasons as above. Not exactly the most serious people religion-wise
I highly doubt that Muslims do celebrate the birth of the Prophet Jesus, first because the date was chosen in a completely arbitrary way by Christians, second because Muslims have their own Calendar and even though they celebrated it, the likelihoods of it falling precisely on the Christian Christmas would be quite slight, and third, if they celebrate the birth of Jesus, they should also celebrate the birth of all other Prophets as well, I think...
Though, I don't know if maybe Christmas is a bit like Halloween over here: a holiday which is not part of the local culture but because of the exposure to Anglo stuff, it's somewhat celebrated by the youngest generation (also because it's a pretext to have parties and a second short carnival), so I don't know if this could be the case of Christmas in Muslim countries (at least the more open) too.