My kids love to draw, color, paint. A couple of fun things we have done is make bookmarks, add the kids photo and artwork to construction paper and cover the whole thing with self-stick laminate. Then we punch holes in the top and use fun ribbons to make a decorative finish. We give these to teachers, friends, everyone who loves to read and loves our kids!
Another project we are working on... I am taking the kids artwork and making photocopies (often shrinking the artwork). Then the kids can send postcards to loved ones with their art on it. This is especially popular with Grandparents.
For Thanksgiving, we made construction paper napkin rings. We used an inexpensive paper-cutter to cut 1 in strips for the "rings". Then we made turkey bodies out of brown paper and attached bright colored feathers. The kids each had a job, so it was somewhat of a production line, even our 2 year old helped by pasting the ends together to form rings. The biggest two traded off making eyes and "gobblers" on the turkey faces. We then wrote names on each napkin ring and rolled a large paper napkin for the middle. The kids loved seeing their final project all over the table! And I don't think anyone left without taking their turkey with! We plan to do this again for Christmas and the random family dinner.
We are going to attempt ice candles soon as well. This is a little more complicated, but would make wonderful holiday gifts for teachers. Here is a website with good instructions... http://www.ehow.com/how_5912_make-ice-candles.html
Another good resource for fun ideas-