K.P.
Pull names and set a spending limit. Exchanging gifts across the country is really difficult and usually results in sending a gift card, which isn't really very fun.
A girlfriend of mine's family does this and I think it's brilliant! The whole family (huge) gets together over the summer and each person brings their "wish list" for the year. One night, they all pull names out of a hat and exchange wish lists. There isn't necessarily a spending limit, but the "giver" is responsible for the "receiver" throughout the year. They buy the "big present" for the holidays, birthday, something little for the "in between" holidays, etc.
I love this b/c it's much more personal and allows people to spend a little more b/c you are only buying for the one person. They love it and we are considering it for my family this year!