I have to admit, I don't buy green gifts for my kids. It ends up being a complete waste of money since I have yet to find anything they like and they won't play with them, so it ends up a huge waste. I've learned to not push them or myself on gift giving holidays and just give in to what they actually want.
What do I do instead? Well, we limit the number of toys the kids get in return for getting what they want, craptastic, plastic, Hecho en China and all. Books are another story, I'm willing to spend more on whatever books they want, but we inevitably end up getting the vast majority of our books from the library anyway, so that's kind of a non-issue. So, it's a parade of Lego toys, Bakugan or whatever suits their current fancy.
I figure I make up for the consumption in other ways and don't sweat my decision. It's certainly not my preference, but after 7+ years of doing this, I know what works and what doesn't. Even when the kids were very young, they always preferred the bright shiny plastic toys over the carefully selected, non-toxic toys made of natural materials that I bought for them. I sure liked them, but since I was the only one playing with them, it didn't make a whole lot of sense to continue buying them.
It is a little easier when the kids are younger since you have a lot more control over what's available to them in their environment. But as they get older and exposed to other kids, media and advertising, they start exerting their own preferences and it can become a huge battle. One that I'm not willing to take on.
So, what do you do about holiday gift giving for kids? Do you stick to your guns and only give them environmentally friendly toys? Or do you give them what they want (regardless of its impact) and just limit what they get?