My son who is almost 7 has asked me why his Dad isn't around and this is what I told him:
"Your Dad wasn't at a place in his life where he could be responsible and dedicated to a baby. It has nothing to do with you, because you are amazing it is just that we both loved you enough to know what he couldn't be a Dad like a Dad should be. He knew it was better that he not be a Dad than be a Dad who couldn't be good to you or couldn't be dedicated." He took it very well and seemed to understand as much as he is capable.
Now - in all honesty - the truth of it is his Father is a basturd who wanted him aborted or given up for adoption and turned abusive to me when I got pregnant but those are details that he never needs to know...in my opinion. When he is 18, if he wants his Father's name and information I will provide it to him but until that time, he will just know he wasn't at a place in life to be a good Father.
From what I have been told, you never tell a child their Father is a bad person as they are a part of their Father and will somehow feel it makes them bad or you don't like them because of their Father. Even though his Father is not involved, I will not speak in a negative manner about him to my son as I don't want to damage his self image.
That's how I am handling it.