How about making a calendar for christmas? About.com's Sherri Osborn has templates on her blog, and easy intructions. You could do a recipe calendar (feature different recipes each month, a birthday calendar if you com from a larger family- list everyone's birthday, anniversaries, special events throughout the year, month by month. Another gift idea for kids to give is have them draw a picture and frame it. Frames can be found at thrift stores, dollar stores etc. This makes a great gift for grandma, and it makes the child's artwork look so professional.
Another gift for kids to give is take some burlap, and a frozen orange juice container or similar size can, role the fabric over the can, glue it and glue some ribbon on the top rim and bottom rim of can. Make s a great pencil holder (I think my mom still has hers, 40 years later! Or if you know how to do t-shirt transfers, have your kid draw a I love grandma or grandpa picture, scan it into your computer, make a transfer, and make a shirt. (If you have some talent sewing, you could hem a piece of fabric so that it forms a rectangle and make a wall hanging this way. All easy inexpensive options!