We don't have kids yet, but we walked through the toy section at Target (to get to the Nintendo Wii stuff
) and I was amazed at how many toys there are and how expensive they are. My kids are getting wooden blocks to play with!!!
I get my little teenage cousins iTunes gift cards.
Also, just FYI if any of you have kids begging for iPods, they just changed the models but there is nothing wrong with the "old" ones and they will be all over ebay for $50. Or you can even get refurbed ones from Apple for a lot less than a new one.