Make a new ornament for the Christmas tree. We do this every year; when the kids move out, they take their "trousseaux" of ornaments with them to decorate their own trees. That way, even though they're starting out fresh, they still have all the memories of their childhood Christmases right there with them!
This year we made ornaments from yarn and plastic canvas. There are directions here but patterns aren't really necessary unless you want them; our freehand ornaments turned out beautifully!
Even the littlest kid can "help" make chenille candy canes. Our family favorite so far is the marbled glass ornaments, though the baked Sculpey Mr. Potato Heads were a hit too!