It might seem like a lot of steps, but they're all very simple and quick. All the images can be clicked to see a larger version.
Materials needed to make the same size as mine:
1/2 yard of main fabric
fat 1/4 of trim fabric
1. Cut your half yard of fabric (if it isn't already cut) and trim the selvedges. Lay it on the table folded in half with WRONG sides together. In the photo below, the fold is on the left side and the edges where the selvedges were are on the right.
2. Cut two pieces of your trim fabric to be the same width as the main fabric and as deep as you'd like, plus 1" for seam allowance. My rectangles were 18" x 6-1/2".
3. Sew the long side seams of your main fabric with a 1/4" seam.
5. Stitch the side seam again, this time using a seam allowance large enough to enclose the previous seam allowance. In my case this was 3/8" but you can make it bigger if you need. Do not turn your bag inside out again. It should now be right-side on the inside.
6. Join the two rectangles of your trim fabric together. To work out the seam allowance you need to add together your seam allowance from step 3 and step 5, then add a tiny bit. In my case this is 5/8" and I lined my fabric up just over the 5/8" mark on my machine to add the tiny bit.
8. Pin the trim fabric to the outside of the sack at the top. This means that you are matching the RIGHT side of the trim fabric with the WRONG side of the sack. Match up the side seams and pin in place then stitch around with a 1/2" seam allowance.
10. On what is currently the outside of the sack, do a row of understitching along the sack edge, close to the join with the trim fabric. This should be sewn through all layers (including the seam allowance at the back).
12. Topstitch down the trim fabric along the bottom edge, close to the fold. (I actually turned my sack inside-out again to do this step as I couldn't be bothered to set up the free-arm)
13. Give it all a good press, and you have a Santa Sack ready to be filled with surprises.
Let me know if you make one, I'd love to see the finished products!