OP here, suggested amount was $20 to $25. Yes, very tacky. Not the first time they have done something like this, and probably won't be the last.
I have gotten the opinions of a few other moms in town, and I have found out that this family has really upset other people and kids for a long time. We have chalked it up to the fact that they are a bad combination of clueless, insensitive, and arrogant. Also, be careful who you confide in! I have learned that parents in question were totally aware that my husband was still looking for a job. Oh well.
My son and I are totally over it. If anything it has been a great lesson for us. I have shared with my kids the opinions of my fellow posters here on the DIS, and we have had some great discussions. Generally, the take away we have is that while you shouldn't go through life being hyper sensitive and walking on egg shells, you should also stop and think about your actions and how it may appear to/or affect others.
The $10 gift card will go into his XBOX fund, and he is totally ok with waiting and saving. He will be a good boy and send a thank you note, but we are done with this family. If the mom asks why, I will tell her, but I don't feel the need to pick up the phone (even if I wanted to). They aren't going to change. Thanks everyone!