I've learned that for many people, gift-giving isn't for the recipient, it's for the giver to feel good.
The closest solution we've gotten is to not do that, but instead use it as an opportunity to talk to the pre-schooler about charity and sharing with the less fortunate, eventually leading him to the "lets give our extra toys we don't play with very much to other kids" thought.
- We end up making a lot of donations to local thrift stores, women's shelters, and other charities immediately following holidays and birthdays without telling our kids about it. The toys they don't play with simply disappear.
- If the gift is something we want him to eventually play with but that he doesn't have the attention span to remember in the near term, we just hide it in a closet and give it as a 'gift' for completing his 'good behavior' chart later on. He's always surprised and excited. Nice win-win for us.
- N-2 members got huffy that they wanted to see the kids open things. No college contributions.
I stopped participating in Christmas years ago. Was very freeing.