This year more people are opting for a "green" Christmas. In many ways this can also be a more frugal Christmas. My family and friends have a couple of appropriate holiday traditions I thought you might like to adopt for your own.
First, we have a lot of reusable packaging that we like to wrap our Christmas gifts in. We have tins, cloth bags, boxes that we've decorated with old Christmas cards, corrugated cardboard packaging with trees punched out of it that came with some nuts in it, and my absolute favorite, a takeout container that I saved from an Italian restaurant that has the Leaning Tower of Pisa on it. I wrote "Buon Natale" (Merry Christmas in Italian) on the top with glitter glue, and colored in the tower. I package the gift with natural colored excelsior topped with a little red excelsior so it looks like pasta with sauce. CD's I wrap by stapling an old Christmas card shut, slipping the CD inside, and taping it shut. I write the "to" and "from" directly on the front. This not only saves money since we don't need to buy much wrapping paper, but also makes wrapping presents quick and easy. It also keeps a lot of gift wrap out of the landfill. We add an additional fun element to this by dating the bottom of the package with the initials of the giver and recipient, and the date. It's fun to look and see how many years we've been using the packaging, and the history of where it's been. We also make our own gift tags out of old cards, photos and colored plastic packaging. Simply cut with scissors or paper trimmer, punch a hole with a hole punch, and use a Sharpie to address the tag.
Another great use for old Christmas cards is to make ornaments for your tree, or for gifts. Google "Christmas card ornaments" and you will find many different patterns. I save cards that I receive, and also those that my office receives.
My friend's family has a tradition of collecting samples and rebate items all year such as coffee, shampoo, deodorant, toothbrushes, etc., and packaging the items in a reusable grocery store tote (Target bags are a very festive red, and Trader Joe's has a lot of cute patterned ones). This way the bag can be reused over and over after the contents are gone. All of the items are useful, and will be used up instead of cluttering the recipient's house with unwanted doodads.
One of our favorite frugal Christmas activities is to pile the family in the car with to-go mugs of hot cocoa or cider, and head out to our local version of Candy Cane Lane. I'm sure you all live fairly close to one of those neighborhoods where everyone decorates to the max. Enjoy your neighbors' displays! They are going to a lot of trouble and (electric bill!) expense to entertain you this holiday season.