Less Expensive Cmas for 2 and 5 Yr Old Daughters

My girls were always happy with new art supplies: fresh paper, markers, beads, colored pencils, play dough, crayons, etc.
Focus on things that will actually get used vs. just getting more toys. Books, DVDs, CDs and games for example. Or things they can play with outside, like skates, tricycles or sleds (if you have snow!)
Kitchen activities are fun too, my daughter got a snow cone machine for her birthday a few years ago and she has used it over and over.
Another option instead of stuff is activities: tickets for a show or play place, a month's worth of tumbling or skating classes or a gift certificate to a fun place like Chuck E Cheese.

I always find that books, games, and wooden puzzles get used for years. I have a 2 and 4 year old who can both enjoy Memory, Hi Ho Cherry O, Candyland, Hiss, or other games like that.

Also, your older one might like tickets for you and her to go to a play or musical event.

play doh! hi-ho cherry-oh! cd's of kids music to play in the car on road trips. games and activities you can do with them are great gifts. :)

You could start some kind of a collection for them. When my daughter was little we started snow globes and dolls ( both porcelain and collector Barbies). She still gets one of each every year. We also give each kid a Christmas ornament every year that represents the year for them ( like this year my son will get a karate ornament because thats his thing right now). I put the year on the bottom of the ornament and they all have one for each Christmas they have had. All my kids get pjs every year on Christmad eve as well.

My daughter has always loved getting a new bigger box of crayons and coloring books. Maybe start a new tradition of getting them each an ornament of their own each year. Or even a keep sake book...I have a lot of books from when I was younger that I kept to pass on to my own children, I was devastated when my Little House on The Prairie books were ruined in a flood while in storage.

DVD player for both to use (great for car trips)
2 year old: a Leapster "laptop" computer/game thing
blocks
movie
crayons & coloring book
Matchbox cars
doll
stuffed animals

5 year old:
paint set
doll complete w/baby stroller
dress up items: fairy wings, plastic kids high heels. boa etc (fosters
crativity)
movie
puzzle

For the 2y:
miniature doll figurines
http://www.amazon.com/Disney-Princess-Figure-Play-7-Pc/dp...

http://www.amazon.com/Disney-Princess-Figure-Play-7-Pc/dp...

For the 5y:
Tea set
http://www.amazon.com/Green-Toys-###-###-####-Tea-Set/dp/...

Books. What is more meaningful than being exposed to the worlds that reading unlocks?