I think it sounds like fun. I am not sure what I have that would be a "favorite" that would be $5, but I guess that's a good challenge to come up with something! I probably wouldn't go to a party that required me to buy more than $25 worth of stuff to bring so I think $5 is a good price.
I totally want to know this. In fact, may be worthy of its own thread. My friends and I kind of do this, except we call it exchanging gifts at Christmas.