We've done white elephant gifts at our parties before - they're a hoot! Our stipulation for the gift is 1. must be something you already have that you do not want 2. something that you would donate or 3. sell in a yard sale.
We don't usually place a $ value on the item - it should not be something the guest bought especially for our party.
Some of our guests don't have clutter to spare I guess and they'll bring something nice that they bought. The gifts that are the most fun are the ones where a woman ends up with an old men's electric shaver or somebody with impeccable taste goes home with an outdated silk flower arrangement... you get the idea.
Have fun at the party!