We don't exchange gifts anymore. My poor mother who could not really afford it had been sending all the kids (grown up and all working) a check at Christmas and our Birthdays. It took a while for her to figure out that none of us were cashing the checks so she stopped.
I exchange with a few friends and we have rules. One of them only wants things that come from the thrift store/garage sale that way no one feels bad if it isn't kept and it's really a lot of fun shopping.
The other friend has a "user-upper rule" If you can't use it up, don't buy it. (Which leaves us with food (chocolate, spices, teas, ect...), soaps, fabric, paper napkins ....)