I have often given my kids used toys - esp expensive ones that are in great condition. The biggie with this was Legos. When DS was 5 or 6, I explained that we had a set amount of money to spend for his bday, etc. I showed him what that would buy from the
Lego catalog vs what it might buy at a yard sale. He thought I was crazy for even asking- he wanted the bigger pile!
I will also give nice used items to people I know also are ok with it. My neice wanted an American Girl doll, but I found a like new one at Goodwill, just missing the box. She was THRILLED. On the flip side, a $100 doll is a bigger gift than we'd usually give in our family, so I had to send emails out to the other relatives saying "she is getting this, but only because it $20!!"