Every year I take tons of pictures of my class with my digital camera and then at the end of the year, every child gets a CD with all the pictures on it.
I was going to make every child a scrapbook, but that gets expensive, so this is the best idea. You can use Windows Movie Maker to add music, text, and special effects to the CD.
My only cost is a package of CDs and cases. The biggest cost is the amount of time it takes to put the movie together, but it's worth it when you see the kids and parents faces as I show it to them.
Many times parents don't get to see what goes on everyday in the class, and this is their little window into what their child did all year. It's also a present that they will have forever.
Hope that helps!