I was given an article from one of the teachers at "parenting" classes for lack of better explanation. It suggested that you buy your kids 5 things (if my memory serves me).
1. something that is physically played with (roller skates, ball, etc.)
2. something that is hugged and loved (doll, stuffed animal)
3. a game or toy
4. something to be creative with (art easel, crayons, play dough)
5. a book
All things can be dialed up or down as far as price and budget.
We've stuck with this idea and use the two bigger items that may be hard to wrap from Santa (or the item asked for). Santa doesn't wrap in our house.
And, we add a personal ornament for them to keep as a keepsake. I bought a journal for each girl last year and haven't done it yet, but plan to write down each year's ornament and why it was chosen for each girl. When they marry, we will give them their box of ornaments and the journal.
For other kids in the family, we draw names among the cousins and each cousin has to pick out the gift for the other. We also set a limit based on VALUE and not actual price since there are so many sales that time of year.