Last year the range we were given was $10-15. DS ended up with a Thomas the Train DVD. Gifts depend on the age group, of course, but this year I am leaning toward a Duplo read and build set.
Ours doesn't have a limit but it is a book exchange. I have spent $5 and I have spent $25 depending on the book my kids wanted to bring.
Best was the year C was 2 and didn't understand he was picking it to give away. Some other kid chose our book from the pile. C recognized the wrapping paper and lost.his.shit. I have the best tearful pictures of him with his arm outreached towards "his" book.
They don't exchange gifts at DD's daycare but I always buy some kind of gift for all the kids in the class. I spend around $5 each. Last year, I got books for everyone. This year, I got plush toys.