TBH it saves on the hassle and you can avoid receiving a load of gifts which might be redundant as one year olds aren't really that bothered. You never know, they might not be flush with cash and welcome someone suggesting it!
I'd love a hand knitted jumper for DD! In my antenatal group with DS (now 4), we all gave each other a £5 Clark's voucher, which did for DS's first couple of pairs of shoes. By 2 we had a mutual agreement not to buy presewnts, but jointly hired a soft play centre for a couple of hours. Again at 3. By 4 we were less of a close group if friends and did our own thing.
I would be honest if you can be as it'll be so much easier later on. If you don't know them well enough a really tiny present is always better for this age anyway as doting relatives will bomb them with masses of stuff quite ofter. It's also less clutter. I made little lavender pillows with names on for my 1st son's friends. If you sew, the other cheap & really nice option is simple drawstring bags with a name or initial on them - I did these for the same type of group of mates & they came in at around 3.50 each.