This year, I thought it would be appropriate to
ask my gift recievers to contemplate whether they have been naughty or nice this year. With no indication of what was in the box, random selection was going to tell them if they've been good or bad. 
Here's how I set it up. I chose six packages to be "naughty" and six to be "nice." On the nice items, were nice names such as "Oh Soup Divine" and "Winter Wonderland Bath Icicles" and "Jingle your Bells" coffee. The naughty names (which were mostly thought up by my husband) were names such as "Cream of Elf Soup" and my personal favorite, "Stocking Stuffer Stomach Pumper Coffee."
After having named all of the items, I put them all into random boxes, along with my crocheted washclothes, potholders and loofahs, stamped the box with either "Naughty" or "Nice" and then wrapped them all in plain brown Kraft Paper and tied a simple ribbon around them. I then attached my "Have you Been Naughty or Nice?" stamped tags that Lily and I made, and voila!
Needless to say, even if someone was deemed "Naughty", they still thought I was very nice! It was a lot of fun making them, and is an excellent project for children. I recommend only doing one item at a time, having all the stuff ready before hand, and your child could definitely help you on this too! I know Lily really enjoyed helping everyone make their gifts!