Most of my gift giving involves food: jars of preserves or baked goods. My husband's grandmother gets a large container of homemade cookies and candy to put out for visitors from us. This year I will be repurposing my saved shortening containers for cookie containers. They're plastic and recyclable where I live, but I still like to reuse even recyclable items. I'll cover the white containers with fabric scraps so that the container itself will also be a gift-much nicer than those gift bags and more durable.
My sister moved across country this summer, so I'll be sending a package of homemade preserves for her family, though I did pick up some inexpensive items for my niece and nephew (children don't seem to like a jar of pickles for Christmas). In past years, I have sewn doll clothes, doll blankets, and knitted hats and scarves.
I cross-stitched stockings and filled them for my husband's parents one Christmas and sewed napkins for another. They also get a box of "canned goodness" as I like to call it: jellies, salsa, and baked goods each year. I will admit that these homemade gifts do not seem as appreciated as store bought ones by my husband's family and if that's the case in your own family, you'll either have to purchase an acceptable gift, or just deal with the fact that not everyone places the same value on the same things.
My parents do not like to receive store bought presents for the holidays. They simply want to visit with family and friends. They also receive an assortment of canned preserves from my garden, along with some baked goods, and sometimes some home brewed beer. This year, they may be lucky enough to get some hard apple cider.
One year I sewed bed quilts for my daughters and an entire collection of doll clothes. Last year I knitted a Slytherin scarf and hat for my oldest daughter. Not sure what I'll make for them this year. (Update 12/22/12: I made my oldest daughter, a "Dr. Who" fan, this weeping angel from an old Barbie Doll.)
I've bought terracotta pots and painted them to look like Santas, filled them with treats and given those away to teachers. Potted herbs and plants from seeds and cuttings make great gifts, as well. I've taken 2L soda containers, cut a vertical slit in the side, and slipped in goodies for an unusual gift container. I've also saved potato chip bags, cut them open, washed them and used the shiny silver inside as gift wrapping and bows.
Because I enjoy making things, the gifts and sometimes the wrappings satisfy my creative urge and produce a beautiful item for someone else to enjoy. I also like knowing that I am not contributing to the continued consumerism and commercialization of a holiday that has become more about showing everyone how you bought your child a laptop, than about family and friends.