Sometimes it's not so much what's in the gift as the concept behind it, and the way you present it. Remember the Dollar Store Santa Dollies at Old Days Old Ways? Even small, frugal or miscellaneous gifts become something special when the creative-giving muse is allowed to run free.
Valerie at Frugal Family Fun Blog has a perfect example of this: "Doll Bath Sets." Anyone can hand a kid some soap, an empty shampoo bottle, and a washcloth, and say "here, go wash your doll." But it takes imagination to put it together into more of a package deal. Valerie is very, very good at this.
Another example: Family Fun Magazine's Hot Chocolate Cones. Mostly hot chocolate mix with a few marshmallows and chocolate chips, but it's the shape of the package (cone-shaped clear bags) that turns it into something fun.
We've had a few successes along that line too: last year's custom Sculpey repackaging, and the clothespin doll kits the girls got a few years ago. Mama Squirrel has also posted gift basket ideas and other thoughts on gift-giving. And don't forget our squirrel's tips on giving "thwifted" books.