Well, I think Harry would just bring him up knowing that his parents died, and how they died. If you tell a child from a young age that they are orphaned, it will not affect them as much as it would if you told them when they were seven, because they would not remember being told, they'd just always know.
I think he might hold back little details. For instance, he might not tell Teddy that they died in the Battle of Hogwarts, he might just say that they were killed by DE's, because it might be painful for him to relive those memories. But, again, he would never outright lie to Teddy, and he would never keep what happened to them a secret.