I agree Tracey: this topic is best dealt with by allowing your child to lead the discussion. I generally answer only what is asked. I also "simplify" my answer if I don't think they are ready for the whole truth. I don't lie outright but maybe by omission in a way that can be further clarified as they get older rather than completely changing the story.

I also agree that choosing an appropriate book and basing your conversation on that can be good.

Even though you might be embarrassed about it I also think it's really important we teach our children that human reproduction is not something to be embarrassed about. Approach it like a science conversation: matter of fact. But also remind them it is a sensitive issue that we don't go around openly discussing with our friends.