My mom is similar, but would never dream of asking for a specific present! Crazy! Are you Santa???
My friends and I have an understanding: Christmas is about the kids, for the kids, and TIME with family. I buy for my husband, son, nephew, and best friend's child. We usually make a project for my mom (hand print ornament and nice card, personalized garden stones since she's a gardener, stuff like that). What I've done this year is make a Special Grandma book (a little scrapbook) where we've made a couple pages of why Grandma Jan is so special to us, and some special moments for that year. It's only a few pages, and then every year we'll add some more to it. It's not about money, it's about the love and sentiment (it takes a lot more time and should mean a lot more). I would invite her over for dinner and to watch the kids open gifts, so she feels important, but wouldn't cater to silly childish behavior.
Another thing I did for a few years which helped to introduce the idea of not buying gifts for every person we know was this: we put slips of paper with the names of different countries in a jar. After Thanksgiving dinner when we talked about what we were thankful for and stuff, we pulled this jar out and ceremoniously drew the name of a country. For example, one year it was Kenya (another Australia, Thailand, Mexico, England): we picked a missionary or teacher that was there away from their family/friends and "sponsored" them. With the money we'd use to buy random stuff for friends/extended family here, we put it to make care packages for someone away from home instead. We put in things they'd miss (REAL toilet paper, peanut butter, favorite candies, necessities, and $ donations for their projects) and send letters/cards. In exchange, they'd send us recipes and traditions on how Christmas is celebrated in that country. We would try it out on Christmas Eve. It was fun! My friends thought so too, and it was a purposeful way to spend the money that noone would argue with.