I have a nice size walk-in closet with lots of shelves. I love having an older home since there is so much space in the house. I'm actually going to move my gift closet to the spare bedroom soon. I have a box filled with body wash, lotions, candles, shaving cream (usually the smaller travel size ones), razors, and so on. These are items I collect from sales and free items I get in the mail. I give out several gift bags filled with these items for Birthday and/or Christmas presents. I usually spend less than $50 for all these items in the box. I give out close to 10 bags per year which makes them around $5 each or sometimes a little more. But never more than $8 each. The recipients love them, and look forward to getting one each year.
I also buy toys that I find on clearance for those last minute invitations to a party. All of my nieces and nephew are too old for toys so I don't buy as many as I once did. I give all my nieces the gift bags, and my nephew will now get either a DVD or a game for his system. I also like to buy really nice picture frames that I find on clearance for wedding presents. Now that I'm selling Tupperware, then I am giving more of it for presents. I can get sets much cheaper with my 25% discount. I might break up a big set of many items, and just give a few items to one person, and the rest to another.
Having the gift closet has been a really big money saver for us. Many times we get last minute invites for something. Instead of stressing about having to shop and spend money we might not have, then all I have to do is go shopping in my closet for the right gift. I also have a couple of gift cards if all else fails. I get these from several pay to click programs I do daily. It might seem like a lot of work but it's really not. I shop all year long so I don't have to spend a lot of money at once. I would suggest putting even $25 a month to the side to stock up on great sales when you find one. I spend less than $400 a year on gifts and that includes presents for ourselves.