In the same boat!!
I got both boys a DSi, but since they are 6 and 7, they really don't understand Santa has a budget and they will get 1 or 2 things under the tree...so they will have a lot more under the tree then I planned on or DH would like (he always yells at me each year about how much I spent...little does he know how much I SAVE due to deals and such!) I'm sure once they are older I will be able to get them 1 or 2 big things and leave it at that!
A LOT of my shopping has been does with deals or sales. And we have cut our list of people to buy for WAY down (my sis and I don't exchange for us, jsut the kids, same with my best friend). The only other kids I buy for, other than my own, are my niece (age2) and nephew (8) and we have about a $40 limit for each kid and my best friends daughter (age 2). Oh crap, I buy for my niece age 15, but I don't buy her as much as I used to (she lived with DH and I for 3 years, and those years she lived with us she was treated like she was our own, in fact 1 year I spent more on her then the boys!) but I buy her more than my other niece and nephew.
Every year I tell myself I will stop buying so much, but every year I can't stop shopping! I know how lucky we are to be able to do this for my kids.
I have also tried ot start activites, like Buddy the Naughty Elf, or making gingerbread houses or baking cookies that the kids will remember when they are grown (I feel as if those activites are the things they will talk about when they are 30, long after the gifts are forgotten.)