Noiy Sukkah-Sukkah decorations:
It is a widespread and old age custom amongst Jewry to decorate the Sukkah with different fruits, ornaments, and valuables. It is a Mitzvah to do so. This is done to express beautification of the Mitzvah, and it is thus fit to be done and those who do so are praised.
What to use as decorations: The custom of the world is to hang all matters of value in the Sukkah, such as decorative sheets. One hangs fruits and other delicacies [including drinks and other liquids]. [It is proper to beautify the Sukkah with works of embroidery, including sheets and tarps, and to hang fruits of significance in it such as almonds, and nuts, peaches, pomegranates, grapes, wines, oils, flours, and stalks of grain. Some would make ornaments in the shape of birds. Others hang fruits of the seven Minim. Some hang Esrogim. Others hang a pumpkin on the Sukkah as a decoration.  Others hang the Paroches of the Aron Kodesh in their Sukkah.]
The Chabad custom: The Chabad Custom, however, is not to decorate the Sukkah. We do not place the decorations neither under the Sechach or under the walls. This is likewise the custom of other communities. The reason for this is because Chabad philosophy preaches Penimiyus, and that one should see the beauty of the Sukkah in the Sukkah itself without any artificial decorations. [Nonetheless, even according to Chabad custom, seemingly one may put up a decorative sheet as a wall of the Sukkah, and it is not required to be blank. Likewise, pictures of Tzadikim may be placed. Also, if one’s children made decorations, one may consider hanging them for educational purposes, to encourage the child in the Mitzvah of Sukkah and make them feel happy with their projects.]
May decorations that were manufactured for the gentile holidays [i.e. Christmas] be used for a Sukkah?
Yes. The decorations do not become prohibited in use unless they are purchased second hand after being used by the church and the like. Their simple manufacturing does not prohibit them. Thus, one may purchase bulbs and lights for one’s Sukkah from a store even if it is also purchased for the gentile holiday decorations. Nonetheless, one should not use decorations that are distinct in use for the gentile holidays in areas that those gentiles are found.
May one use mechanical chirping birds as decorations for one’s Sukkah?
Yes, they may be used even on Shabbos and Yom Tov.
 See Piskeiy Teshuvos 638:8
 See Admur 638:6 and 11; Michaber 638:2; Sukkah 10a-b; Beitza 30b; Shelah; M”B 638:11 in name of Elya Raba, in name of Sefer Chassidim; Darkei Chaim Veshalom 767 and 736
 M”B 638:11 in name of Elya Raba, in name of Sefer Chassidim
 Shelah ibid
 Admur 638:11
 Michaber ibid
 Admur 638:6; Michaber 638:2; Sukkah 10a-b
 Shelah based on Beitza ibid, brought in M”B 638:11; Darkei Chaim Veshalom 767
 Darkei Chaim Veshalom 736
 Biur Halacha in name of Chasam Sofer
 Admur 638:20; M”A 638:9
 Custom of Sephardim, brought in Sefer Eretz Yisrael of Rav Yechiel Michel Tukichinsky
 See Otzer Minhagei Chabad p. 267
 Sefer Haminhagim p. 65; Sefer Hasichos of Rebbe Rayatz 5704 p. 12; See M”A 638:4 in name of Sefer Chassidim 263 that if one knows that children will eat the fruits, then it is better not to hang them
A letter of the Rebbe on the subject: 7 Cheshvan, 5715  Generally, a Mitzvah must be observed on its Divine authority (with Kabolos Ohl) and not on rational grounds, i.e. for any reason or explanation which we may find in it. An exception, to some extent, is the case where the significance of the Mitzvah is indicated in the Torah, and our Sages have connected its fulfillment with it. At any rate, only a qualified person can interpret it more fully. We have a rule that a Mitzvah should be performed to the best of one’s ability, and as the Rambam explains (at the end of Hilechoth Issurei HaMizbeach). This applies especially to the object of the Mitzvah itself, e.g., a Talis should be the best one can afford, an offering should be the most generous, etc. Unlike the Sechach [branches covering the top of the Succah] and walls of the Succah, decorations are not an essential part of the Succah, but an external adornment which adds to the enjoyment of the person sitting inside the Succah; they are, as the name clearly indicates, supplementary objects which decorate and beautify the external appearance of the Succah.
The attitude of Chabad Chassidim in this connection, as taught by generations of Chabad leaders and teachers, is that the Succah is to imbue us with certain essential lessons, which are explained in Chassidic literature and Talmudic literature in general. It is expected of Chabad Chassidim that they should be impressed by the essential character of the Succah without recourse to “artificial” make-up; that the frail covering of the Succah and its bare walls, not adorned by external ornaments, rugs or hangings, should more forcibly and directly impress upon the Jew the lessons it is meant to convey.
 Sefer Hasichos ibid
 See Piskeiy Teshuvos 638 footnote 25; Ercheiy Yehoshua 212
 See letter of Rebbe in previous footnote
 Shevet Halevi 2:57 based on Temurah 29a, Chasam Sofer O.C. 42; See regarding Hazmanah Lav Milsa Hi: Admur 42:4 and 6; Michaber 42:1; Brachos 23b; Sanhedrin 48a; Mordechai Megilah 819; Nimukei Yosef Sanhedrin end of chapter 6; See regarding not using ornaments of idolatry: Michaber Y.D. 139:13; O.C. 154:11;
 See M”B 494:10 in name of Gr”a and Chayeh Adam, that the custom of placing plants and trees in shuls and homes on Shavuos was abolished due to it being similar to the gentiles, referring to the Christian festivals.
 Beir Moshe 7:120