We just went through this with our 6 and 4 yr old daughters this past year when their baby brother was born. We chose NOT to tell them and see what they said...their concensus was that the baby comes out my belly button. Although I thought this would be a great learning opportunity and perfect time to talk about "where babies come from" in very simple terms, we were faced with the harsh reality that every child on the bus did not need to learn this fact. And that our chatty 6 yr old may actually upset many parents if we shared this with her.
I am not embarrassed or one to shy away from these topics with my children. It was a very hard decision to come to.
I think you can simply tell him that a mommy's body is MADE to make babies and that the doctor helps her when it needs to come out. We also told our girls a bit about "labor" so that they wouldn't be scared if they saw me huffing and puffing, wincing, etc. We just made it sound like a happy time because we knew the baby was coming soon.
In reality, they didn't really care HOW it came out. Sure they asked a lot. But we turned it around and asked what they thought. When they asked HOW the baby got there, we just said that God decided to give Mommy another baby in her tummy. They were fine with that.
As much as I appreciate your son's curiosity, personally I just think it's innocent questions. Don't make it too informative at this point. Or else you may have some "friends" Moms calling you up.
BTW - our girls have watched me nurse my children, they never make a big deal out of it. And even when a friend was over playing and saw me nursing, my 6 yr old simply said, "Oh, she's just feeding the baby. Let's play!" My point is, if you don't make a big deal of this, he won't either.
If you really feel now is the time to explain a vaginal birth to him, get some books from the library. Some are VERY graphic while others use cartoon like pictures. We did this and our girls were very excited to see how a baby grows inside my tummy. They even asked to go out onto babycenter every week to see what the baby looked like now.
Good luck!