Preschool children do NOT understand a gift exchange. I don't mind going out and buying the $5 gift for a particular gender child, but unless we are all buying the same gift the outcome is not going to be pretty.
Today I went to Target to pick up the last few things I needed for the class Christmas parties, and get the water and snack for my son's Kindergarten class. Tomorrow is Child #5's Christmas party and gift exchange at his twice a week preschool. We wandered Target and I found a pair of snowman socks for $1, a package of Cars stickers for $1, and a puzzle for $3. I thought I had a good thing going. Until Child #5 saw the puzzle. He claimed it as his own. I've tried to explain the gift exchange concept, but I think its lost on a 4 year old. No, he doesn't want to trade "his" puzzle to his friend and his friend give him a surprise present. He wants "his" puzzle. Its a freakin $3 puzzle! I even tried to convince him that if he really wanted it maybe Santa would bring another one just for him.... it would be like you both had this awesome present. NO. That does not work. For the past 3 plus hours all I've heard is intermittent whining about this damn puzzle.
My tip to all you folks out there considering a gift exchange for your young children: Don't even think that it will be so cute to have all the kiddos exchange stuff because its going to turn into a throwdown fight when someone else has whatever cheap ass gift it is that your kid wants. Boycot it. Its not worth it.