Personally, I think something handmade is much, much more precious and valuable than something bought from the store. Of all the things my Grandma gave me, the things I treasure most now are the doilies, afghans, and Christmas ornaments she crocheted and gave me. She would give me one every time I would do something for her and always apologized that she could not pay me instead. I only wish she knew how much more I loved these than the handfuls of change she would give me sometimes.
Cookies and cakes are a great idea! Look around at how much stuff and clutter most of us have. Do we really need more? I think something consumable like that is a wonderful present!