I LOVE Paulette's idea. My son has a very large extended "family" through his church and can't afford to buy presents for all the birthdays and holidays. He hit on the letter thing and it has become a big deal in his circle. When he graduated and made plans to go away to school, his friends poured out their hearts in letter after letter. He was so touched. I've saved all these letters and have to say they probably mean even more to me than they do to him. I also have several handmade cards saying things like The Top Ten Reasons I Love You. These are the things I keep tabs on in case I ever have to evacuate. They are PRICELESS to me.
I am big on handmade gifts. Here are some more winners:
Christmas ornaments made of wood with photos and/or a personal message or quote on the back.
One year I made personal photo albums for each of my children and kind of did a written story or narrative with it geared to their personality. BIG winner.
Christmas stockings personalized with their name and little jingle bells and do-dads attached. My grandmother made a set for my family forty years ago made of felt and little things stitched on and my sister and I treasure them. When our children were born she made another set for them. They are priceless family heirlooms.
For small kids a book that is accompanied by a cassette tape of you reading it (ring a bell to let them know it's time to turn the page) BIG hit with grandchildren.
Men especially love anything home baked. Cookies, fudge, homemade chex party mix, sugared peanuts or seasoned almonds. Look on http://www.recipezaar.com for ideas.
Little boys love small bags full of mini marshmallows and a poem that says something like "You were naughty, so here's the scoop. For Christmas you get this Snowman poop."
Little boys also love pvc pipe glued together to make pop guns that shoot mini-marshmallows. You can find how-to-do-it on the internet.
Last year I put punch balls (2 for $1 at the dollar store) in the little kids stockings and they were the hit of the party.
One year I decoupaged flattering photos and pretty tissue paper onto the backs of clear plates so they looked like stained glass. Moms love pictures of their children immortalized. If you can get the child alone and do a handprint or plaster mold of their hand that's the best.
This year I'm taking a plain white platter and using ceramic paints, painting personal messages on them like "And so they lived, Happily ever after" (that's my favorite) and maybe little stick figures with their names and some flowers and things.
I painted ladybugs on paving stones and gave them to my sister for her garden.
I tracked down my sisters favorite childhood book on ebay. That made her cry. I photocopied a few pages and framed them to hang in her nursery for when her grandchildren come to visit. (also gave her the book)
For little girls you can buy pink foam crowns for $1 at crafts stores and write her name on it with a glitter pen.
I once made my husband a list of The Top Ten Official Reasons Why You're Dreamier Than Fabio and framed it. (One reason was, "You're smart enough to recognize butter")
My dad finally realized his dream to buy some land and this year we're making him a gift basket with some of my favorite seed catalogs, some seeds (5 packs for &1 at the drugstore) a couple of hand tools and gloves and a gift certificate for Home Depot.
Little girls love handbags and they're super easy to sew. I once bought an old chenille bedspread with butterflies on it on ebay. For $10 that old bedspread made 4 darling handbags that also doubled as soft pillowcases.
Children also love little aprons personalized with their name on it and maybe a set of cookie cutters to go along.
My uncle is a landlord so I once gave him a toilet plunger painted and gilded and decorated with pearls and such. He was tickled to death and couldn't wait to take it to his next landlords association meeting and show it off.
I found two foot artificial trees for $1.50 at the craft store so I'm doing up some personal Christmas trees to give. My favorite is the Princess Themed ones for my granddaughters. Or maybe the red and white peppermint candy theme...
Go visit a local crafts store like Michaels or Rag Shop or a fabric store and you'll get lots of ideas. Go to a local flea market or craft show for good ideas of things you can make. Put some thought into each individual person and what they secretly like. I bet you'll find people would rather get something you've made yourself than some mass produced thing they could've bought themselves at the mall. I consider my highest gift giving achievement to be when I can bring the recipient to tears, lol. It's kind of easy with family, cause you know what makes them tick, and what their secret fantasies or fondest memories are.
Best of all, enjoy the process. One of my favorite memories is sitting around the dining room table with my children making gifts together and talking and laughing.