We get off pretty cheaply. We spend about $100 on each of the kids, then I do photo calendars and other photo-type gifts for all the grandparents, great grandparents, and aunts and uncles (8 people). All of that comes to about $350 or so including the kids.
Some years DH and I exchange small gifts, and other years we wait and get something larger together when we get our income tax return. This year we just bought some baby stuff and will be busy with the new baby, so we'll probably wait. (Poor DD--I didn't buy her anything for the holidays. One day of Hanukkah can be her new room decorations, another can be the new car seat, the monitor, the outfits, etc. If I have time I'll probably get her one or two new toys, but she'll be too young to know or care and the truth is that we have plenty of newborn toys already. Luckily her grandparents and aunt and uncle will probably spoil her for her first Hanukkah!)