All Hallows' Eve, or Halloween as it is commonly known, is a day of remembrance. It is not the devil's birthday (I don't know where that rubbish came about) nor is it a harvest festival (We already have one. We call it Thanksgiving). Many churches boycott this holiday, saying that it has pagan roots. Yes. Yes it does.
The Celts of the British Aisles celebrated a day they called Samhain on what is now known as October 31 (they used a solar calendar, so the date is pretty exact). It was the day on which the god of the dead ushered those who had died over the past year (you see, it is also their equivalent to New Year's Eve) to the realm of the dead (The seasons of autumn/winter coincide with this. Make sense?). As part of this celebration, many of our modern Halloween traditions (costumes, gourds with lit interiors) get their start.
To combat this, the Church created it's own celebration to commemorate all saints on November 1 (All Hallow's Day, or All Saint's Day). The day before is, of course, All Hallow's Eve. So, yes, churches, it does have pagan roots. But so do Christmas (Why else would the celebration be in the winter? It was originally the Celitc celebration of the solstice.) and Easter (The Jews use a lunar calendar. Easter doesn't even always follow Passover. The timing coincides with the Celtic celebration of rebirth and Spring. They call it Ostara.)
Interestingly enough, one of the most important holidays of the Church (Easter) and one of the most shunned (Halloween) are nothing more than the life cycle celebrated by the Celts (Life and Death, Fall and Spring).
So what about celebrating these holidays? I firmly believe in remembering the dead. Do I need a special holiday to do that? No. But I have no objection to setting aside November 1 to be thankful for the believers who came before me. Christmas and Easter? Remember the birth and resurrection of our Lord Jesus Christ always. Do you need a special holiday? Again, no. But does it hurt to lay aside one day of the year?*
Now the economic take over of these holdiays is something different. Trick or treat? The Easter bunny (a Celtic tradition as well)? These are pointless, but fun.
As for churches? Harvest Fests (or, as at certain military posts, the Halelujah Fest)? You're not fooling anyone. By wearing costumes and carving pumpkins, you're avoiding the Christian aspect of the holiday and embracing the pagan roots (Irony, thy name is fundamentalism).
Edit: *Oddly enough, Christmas and the feast day of Saint John the Baptist fall on or near the equinoxes, two other major pagan holidays, to symbolize John's saying of the Christ, "He must increase, but I must decrease." (John 3:30) Just so, light begins to decrease on John's feast day, and increase just before the mass of Christ's birth.