Here is what we do - very unique and a ton of fun!! The only thing is we do this with adults (kids are still too little).
First we pick out names from a hat (you cannot have your spouse). The name you pick is kept a secret. We have a set amount for the gift ($30) and you have to wrap this gift uniquely. You just can't wrap it in Christmas wrapping paper. We have had great themed wrapping - some have been great. For example when the whole Y2K bug was going around in 1999 my DH made a computer (monitor, keyboard, mouse, speakers and tower) with bugs. Some others have been a christmas tree, a melted snowman, a spool of ribbon, a hot air balloon, a wreath, etc. The gift has to be incorporated with the wrapping so that makes it a bit more challenging.
We always have Christmas at my Aunt and Uncles house so what we do is put our gift in a black plastic bag to bring it in so nobody can see what it is and then my Grandfather (who does not participate) is the one who takes all the gifts out of the bags and assembles them. Then each person goes in one by one and makes changes and fixes things that need to be fixed.
After they are all set we have a piece of paper and we number each gift and on our paper we write who we think made the gift and who we think it is going to.
It is a ton of fun. JUst recently (these past couple of years) we have put a wager on it. You donate $5 per person and the person that picks your gift as the "BEST" wins the money ($40).
It really makes you think and try your best to make yours the most uniquely wrapped gift knowing that there is a prize involved too!!
Lisa