I feel for your dilemma. I can't even go into the terribly twisted dynamics (both good and bad) of my family. However one picece of advice I feel I offer is never expect anything of anybody, and I feel it is horrible for family to expect anything of you. I don't mean this to sound in a sour grapes jilted way. My husband and I are very compassionate and giving toward our family, and we do things for our nieces and nephews because we want to, not because it is expected of us. There are those in our family who would expect things, and usually they are the ones who cause all the trouble at family gatherings. (I know I am not alone here!)
At Christmas and on birthdays my husband and I remind our children that not everyone always can give, or does give gifts. They should be greatful to just spend time with family members. (now I sound like little house on the prairie) This way they don't have their feelings hurt when/if they don't recieve something, or on occasion receive something very strange (my son once got a roll of film from his aunt, he doesn't even have a camera). I will admit that I do become a little irked if certain family members who can, don't make an effort for the kids, but I have to pull myself back and remember, "Don't expect anything!" It is so hard!
As far as your DH wanting to go all out at birthdays and Christmas, if you have the means to do it.....let him do it! Imagine how the kids feel being so spoiled! Even if he doesn't talk to them the rest of the year, I bet they talk about him a lot. 2 hours away can be difficult for some to keep in contact, I am guessing DH isn't much for the computer, or at least for emailing. Also, his siblings not having much to do with him unless they want something might be reason for not keeping in contact through much of the year. If he calls or emails, maybe he is afraid something might be asked of him. I might be reading too much into your post, but it sounds like you are a little disgruntled toward your inlaws for not bothering with you two unless they want something, but you have to remember, it isn't fair to punish the kids for how their parents behave. Maybe your husband wants to go the extra mile for birthdays and Christmas just for that reason.
I am sure you have talked with your husband about this and explained your feelings. Hopefully he has explained to you why he does what he does. If not make sure you tell him how you feel, but if he disagrees with you, I wouldn't be too pushy. He isn't doing any harm towards the kids, so just let him go with it.
Good Luck to you.