I have made the kids handmade ornaments every year since I started having kids... then when they get married/etc, I'll have a bunch of ornaments to give them. This year, I am making stuffed trees a la Little Birds.
I altered her pattern a little.  My tree measures about 4 inches tall.  It is completely hand-stitched.  I did it last night while watching the Biggest Loser.  Then I stitched on these seed beads... it was actually extremely therapeutic.  I have two more to make... then I'm gonna make a set of three larger ones (the tallest being 8 inches) to put on top of something for decoration.
  

It's not quite done.  It needs a loop for hanging on the tree and a star... which I think I'm gonna make out of some yellow felt. I used wool felt for the green, but I think I'll just use craft felt for the star.  If you haven't used wool felt... you should.  It's amazing to work with.
 I also have plans to make the girls each a doll or all three kids a softie.  I'm also making Miles a superhero cape as the only capes we currently have are pink and Matt hates it when he wears them.

























