We have a gift exchange between the kids and DH and I. Usually $5-$10 each depending on our finances for the year. We also encourage them to make it a homemade gift. Then we give the, one "big" gift (size is relative, doesn't mean expensive, just means it's usually one gift they really wanted) and a few little gifts (hair ties etc). Since we celebrate Chanukkah I have to spread the gifts out for the 8 days. Instead of gifts for some of the days we'll do something fun like do a craft or I'll get a family gift, like a new game and we'll play that, that night.
My new husband of 7 years is Catholic, and he wanted a tree and all and to give gifts on Christmas. We did it for a few years, but it's a headache (trying to explain to the kids what it was etc, since they are raised Jewish it's very confusing for them) Our problem with Christmas was more than that though. My husband wanted to spend TONS of money and I didn't like that. Over the years I realized why he did it... the only attention DH got and only time he felt "loved" was at Christmas and birthdays when his parents pretty much "bought" their love with gifts. I tried to explain to DH that kids really could care less that they got a lot of gifts or how much was spent on them, they wanted us more than gifts. After a few years and him seeing that one single birthday gift could be as exciting and more appreciated than $500 worth, he's getting "it".
I think the breaking point was when he worked his butt off to buy mini ATV's for the 2 youngest girls, and he was so excited to see their reaction he didn't sleep all night. The next morning, the girls got up and ignored the ATV's sitting in the middle of the living room and went right to the cheap stuffed animal I bought one, and a game I bought the other. (I literally had to point the ATV's out and they took up the whole room and by then DH was in tears)
Yesterday was Sarah's birthday, and we have little money right now. I got her a few used clothes (and most of them were given to us) and a couple of used game boy games and that's all. I think I spent $10 total. DH was really upset that she'd be disappointed, and she wasn't, she was thrilled. I really think he understands now.