I think ornaments are kind of awesome if they have the kids picture in them. Add a date and you have a gift you can give for the next 14 years (as in you make a new one each year with an updated photo and date).
I'm making these with my children's classes in schools. You don't need to be terribly craft - just cut strips of bright, matching contrasting fabric and mod podge away (mod podge is easily avail at something like a Michael's, you can also make your own with water and white glue).
My mother still has some of our nursery school ornaments, which means she's been hang g them on the tree for well over 40 years. May yours not last that long!
The angel made out of an old fashioned clothespin and felt (and of course glitter, you can't do kids crafts without glitter) still survives. The mouse made from half a walnut shell and tiny bits of felt survives, along with strawberry made from a walnut shell with walnut removed (and glued back together). The shellacked cookie ornaments did not last 40 years, thank god, so maybe you should make those. There's a recipe for cookies that turn hard as concrete when cooked, but don't burn. Paint them after they're cool, or decorate with glitter and assorted stuff. If I remember correctly, a thicker piece of cord worked better for hanging those and you need to make sure the holes for the string are big enough and not too close to the edge.
Or you could go to your craft store of choice and get ideas from the stuff in the kids' section. Beware... It's a dangerous place because you cold spend a lot of money very fast...