Don't Call Me Hard Ass

I love my children with every fibre of my being. I would go to the ends of the Earth for them, and back again. I will do everything in my power to make sure that they know they are loved and cherished. But I will not ruin them. Ok, maybe I'll ruin them a bit, because that's kinda what happens, but I won't ruin them in the important ways.
So my four year old might be having some adjustment issues to his new baby brother. Or it could be that he doesn't nap anymore. Or maybe even that he's learning bad habits/attitudes from other kids at playschool. Whatever the reason, I'm getting to my wits end. He needs to be told things repeatedly, he gives attitude and has started talking back, when he doesn't get his way he fake cries and says things like "I don't care about you anymore". He is all about wanting; "I want a new toy", "I want a treat", "I want to go out for lunch". Or not wanting (read these with major attitude); "I don't want to go to bed", "I don't want to eat this for supper", "I don't want to brush my teeth", "I don't want to listen to you ANYMORE!". {le sigh}
This morning he touched Jibbles (our Elf on a Shelf) for the third time. The first time, Jibbles' friends came and revived him that night with Christmas Magic Dust. The second time, Jibbles had to go to the elf hospital in the North Pole for a couple of days and recover. Each time he's had a note reminding Trent not to touch him, that it hurts him and takes away his Christmas Magic... but Trent touched him again today. Three strikes, buddy. The elf if going back to the North Pole tonight and won't be able to continue reporting to Santa about good behaviour. Speaking of behaviours; Trent already got a first strike letter from the big man himself. Today he's going to get his second strike. When I told him that Santa wouldn't be happy about this and he'd probably be getting his second strike, he just fake cried and wailed about wanting new toys and Santa has to bring him new stuff.
I'm really not sure what to do from here. Part of me wants to completely cancel Christmas. Another part is so heartbroken that this type of attitude has started. I want to teach him that the holidays are about family and giving - but it's hard to teach that it's about family when we've got none here and I'm just not sure he really gets the whole 'giving' thing.
I don't want my children to grow up to be spoiled little a-holes who think that they will always get whatever they want at Christmas, no matter how they behave, just because it's a present time of year. I want them to know and understand the JOY of giving back. I want them to be THANKFUL for the things they have and GRATEFUL for the things they get. So does this mean I have to be a bit of a "hard-ass" until they learn? Does this mean that maybe I have to give the big man in red the night off, or send our creepy little elf away, so my child(ren) learn there are consequences to how they act? Do I have to pack up one of my favorite holidays to prove a point, to teach a lesson, to ensure that my children grow into more well rounded people?

Do you have any suggestions for teaching young children how to be thankful and grateful? What about for teaching giving back? And how do I continue these lessons throughout the year?? Please comment, dear readers - this mommy is struggling with what to do.