Good question! My younger son is turning 3 next week, plus xmas coming up, so I've been answering it a lot.
I also have an older kid, so with the benefit of experience: People come up with better ideas than I have, frequently. I work, I have kids, I spend very little time shopping. My ideas are probably boring. Part of the fun of gifts is the surprise! (HATE the idea of wish lists, at least not until the kids are quite a bit older.)
I don't like being asked to buy only one specific thing (I have lots of nieces and nephews.) I'm not a shopping service. Might be bitchy, but there it is - maybe your relatives feel the same way.
On the other hands, people who don't see the kids every day sometimes come up with things that are great but not interesting to them at all. I don't want them to waste money either. So to avoid that, and to help out, I will say something like this:
"I'm always surprised by the great things people find in the toy stores! I'm sure anything you think he would like, he will love. Lately, he's at the stage where he really likes dinosaurs and trains [substitute whatever works for you - "pushing his shopping cart around"] and imaginative play. He's not really into construction toys yet, though. We are lucky to already have a lot of Fisher Price Little People already.
I think he would like anything from the "kitchen" aisle at toys r us, or anything with dinosaurs on it. He also likes dress-up and playing ball."
At this point I usually add a couple of specific gift ideas if it's a relative. "I saw the Intellinext dinosaur, and I think he would really like it. Also, he always loves a Thomas engine, although we definitely have enough track!"