I love the photo idea.

For me, I don't do Birthday gifts (do do a birthday party for each though), or Christmas Gifts (do a bunch of Christmas crafts).
But, every year at year end (I have all teachers children) I do a photo book (they have small, $6 ones at Walmart). I attach the photo book to a gift bag of some summer toys. When they are done daycare and off to school I do up a really nice photo book for them of their entire time at daycare.