My tree is decorated with all sorts of ornaments. I actually buy one special ornament each year that is significant for that year. For example, on 2000 I bought a wedding one, in 2001 it was a new home one, 2005 baby, etc. We love deciding what made that year special. This year I will probably get 2, one to celebrate the life of my dad who passed away a couple of months ago and one to celebrate out renewal next month.
As for a friend, I have a friend with whom I exchange an ornament each year. Again, we might buy something of significance for the year or something about our friendship. This year, I will get her a pregnancy one since she recently found out she was pregnant after 6 years of trying.