Use anything you want, really. The holiday tins from Hershey's and Campbells Soup can look good with trains. Porcelain villages are the rage today, but in years past Christmas villages were made of other materials. If you happen to rescue a set of those from a relative's attic or basement you may find they look OK with trains. Plasticville or Marx/K-Line plastic buildings also look good. If you're on a budget, there are lots of paper cutout buildings available but the size is usually more appropriate for HO, so if you're running anything other than the 6-inch, 4-wheel cars from Marx, or the early low-end 6-inch Flyer and Lionel, they'll be way undersize.
It all depends on the look you're after.
For snow, a number of places sell a cotton-like "Christmas Roll". Since I like to run trains that spark a lot, I used layers of white tissue paper instead, since the tracks make the train sit high enough to keep the sparks away.
The key, really, is to decide what you like, roll with it, and use what you learned next year.