Regular Games ($40-$60)
On the very top of my list is Epic Mickey. Warren Spector is the designer mastermind behind this one. He helped make one of my favorite games, Deus Ex. Because of that, I trust him implicitly. It's an homage to Disney's rich history, and it looks like an inventive one at that.
Next is Rock Band 3. I still play the Rock Band series at least a couple times a week. It's not a game so much as a new way to experience music. I get tired of cranky musicians complaining about it. "It's not real blah blah blah I'm old." It's not replacing music, by golly. I don't really get tired of it. All told, I have 333 songs at my finger tips (I'm too scared to figure out how much money I've actually spent on this series), so I don't really have a good reason to get bored of it.
God of War: Ghost of Sparta is another one. The PSP has been a disappointing system. The only games I've been really interested in, besides the wonderful LocoRoco, are just extensions of existing franchises (Final Fantasy VII, God of War, Metal Gear Solid). The first God of War for PSP was fantastic, and this looks to be just as good. Andrew Dennis and I both view God of War in the same way and come to completely different conclusions about it. Yes, Kratos is juvenile and ridiculous and completely unrelatable. That's why he doesn't like it, and that's why I do.
Nintendo has incredible in-house development. That is why I would argue they sell as many systems as they do. In that category are Kirby's Epic Yarn, and Donkey Kong Country Returns. Nintendo may not be the most interesting development house on the planet, but they make superbly crafted games that are almost always a ton of fun. Their games may not surprise you, but they are SUPER reliable and consistent.
Smaller Games ($10-$20)
Limbo has been getting a lot of attention lately, and it's no wonder. Just look at this screenshot. That's all I need to play a game like this, honestly. Unless the game is just that static image. Then maybe not.
Xbox Indies has been doing really well. There is an overwhelming amount of content published to it weekly. Super Meat Boy is another game that has been receiving a lot of hype. Everything I've read says it meets those expectations.
Fantasy Section
This is the part where money is no object. If I had all the money I wanted, I would throw it away on these items.
Rock Band 3 Pro Guitar. This thing has a button for every fret and every string that would be on a real guitar. That makes for a total of 102 buttons! It's crazy, and will probably do a decent job of teaching you how to play the real guitar. $150.
Then there's the REAL guitar. This Squier Stratocaster is compatible with Rock Band and is somehow able to track which strings you are pressing and strumming. It's pretty crazy. I think it uses magic. You will be playing a real guitar along with a real song. There isn't any different between what you'll be doing in the game and what you would be doing in a real band. This is the final realization of Harmonix' vision for Rock Band. This won't be available until next year, but I thought it was worth mentioning. It'll be like $300 or something. Sheesh.
Microsoft Kinect. I was a huge skeptic of this before it released. To be fair, the demonstrations of it made it look like an interesting piece of technology, but applied to gaming very clumsily. I finally got a chance to play it and it is indeed fun. I'm still not sure if it's much more than a novelty at this point, the developers will decide that. I put it in the fantasy section because of its price: $150. That's only $50 less than a Wii. I don't think it's worth the money yet.
What are you asking for Christmas? GAMING RELATED ITEMS ONLY. I don't want to hear about this awesome pair of socks. Gosh, shut up about it already.
*It's not free for your parents, though.