Obviously, a lot of gifts go to kids. With kids, buying gifts is simple: you buy them something that they want but cannot afford. This is not too difficult, since they want everything, and they have no money to buy it with. With adults, this principle rarely applies. You have to be quite a bit wealthier than someone to buy him something that he cannot afford. The thing is that, if he really wants it, normally he can buy it if he's willing to give up something else. If you really love seafood, you could probably afford to eat it almost every night — provided you were willing to save less for retirement or your kids education, drive an older car, or live in a smaller house in a worse neighbourhood. If it's something you really want, odds are that you will make the sacrifices to get it. The things you absolutely cannot afford are very limited, and so expensive that an ordinary person could not afford to buy them for you, even if he was willing to spend a large amount of money — things like a very fancy car or a better house.
So when you give a gift to an adult, you're not usually buying something he can't afford, but rather something he chooses not to afford. You buy him, in other words, something he would not buy for himself. This is why there is such a big market for novelty items: you wouldn't normally buy something silly for yourself, but it is precisely the sort of thing you would buy for someone else (and for that very reason). Moreover, the economics of gift buying is almost inverted from regular demand, because you don't want to spend too little on a person. If you spend $25 on an item that looks like it is worth only $15, you don't feel bad about it because that extra money is part of what you're sacrificing for the gift receiver; you don't think of it as throwing away money to the merchant. By the same token, if you find a wonderful $25 gift item on sale for $5, you don't necessarily feel that you've saved $20; you feel that you need to get something else so that you're not cheap. Thus my bafflement at going into gift shops and finding completely useless items at inflated prices. It's not illogical, because people don't buy them for themselves. They buy useless items because they want to get something that the gift receiver would not normally buy, and they don't mind spending the money because that is part of the sacrifice. (I'm sure there are many people who do not reason this way — people who like to buy gifts that are on sale. But I think the contrary is more common.)
You don't have to resort to buying worthless gifts, of course, although I admit that I have done so many times myself. The ideal situation is when the person collects something. It's best if the collection is general rather than specific. My dad collects James Bond movies, but I can't buy him one unless I know what he doesn't already have. Also, there are only so many of them, so this gift idea will run out eventually. Thematic collections are better for gifts. A lot of women seem to collect a certain kind of animal, for instance: I've known ones who collect frogs, pigs, cows, buffalo, ducks, and others. Those are great for gifts, because there are always more things to get, and you can find a wide variety of gifts — not only stuffed animals, but calendars, posters, books, etc. Other people have hobbies that can serve a similar purpose: a particular sport, college, type of music, etc. Of course, even the most avid fan of a particular subject may get tired of receiving, say, pig-themed gifts every Christmas and birthday.
My theory is that the best gift should be not only to a particular person, but also from a particular person: in other words, the gift should reflect the interests of both the giver and receiver. Obviously, the most important thing is to give something that a person wants, but if it can also be something that you like or have an interest in, that makes it more personal. I like games, so I like to give games as gifts when I can. Not many people play games as much as I do, but most people play occasionally, and I might be able to find a game on a subject they are interested in. For example, I got my wife a game about the stock market. She likes stocks; I like games. I have to be careful giving games, however, because it might seem self-interested — perhaps I'm giving them because I want to play. That makes them better gifts for people I would never have a chance to play with.