Our school do the combined gift thing but with personalisation (stickers for in cards usually).
If I could find the text of the letter I got this year I would post it up as it was really good.
Something like "Please do not feel you need to give to this collection. The class reps are providing this as a service but if you have your own traditions or just don't want to get involved that is obviously your own choice and just fine too. Equally, if your child would like to decorate the cards for the teachers this does not imply you must donate any money. Your child's drawing will be worth more to Mister XX than anything else, after all!
People have asked what to give in the past, and while we are loath to give any guidance we can say that donations are often in the range of £2 - £5 per teacher. Sometimes more, sometimes less, sometimes nothing, please make your own choice, especially in this current financial climate".
I usually write my own thank you note and often also give a picture book to the class from our home country at the end of the year, but not at Christmas.
Our school usually give WH Smith vouchers so I guess the teachers could spend it on themselves, the class, or their Christmas shopping as they see fit.