I think a gift card is better than cash. While she might pay the power bill with the cash, at least a gift card can be used for stuff she might buy anyway and she'll have the leftover cash for the power bill.
After consumer complaints, there are now some major cards (e.g. Visa, Mastercard) WITHOUT fees or declining values. They are available for shopping malls that give the teacher a lot of choices about how she spends her money.
Another option would be to split up the donated cash into a couple of gift cards - perhaps a great restaurant, the movie multiplex, a boutique, and a mainstream store. Some clever parent could make a cute display of these cards - maybe buying one of those photo display "trees" and clipping a gift card into several of the display "branches" and maybe a "thank you" card or "from all the parents and kids of Grade 2" in the spares. This would leave her with a small tangible gift - the photo tree - as well as an assortment of gift cards. Be sure the cash amounts are listed on each gift card, either pre-printed or jotted down by the coordinating parent with a black sharpie marker. It's really frustrating to have to go to each store and ask how much is on the cards.
As a former teacher, I can tell you this would be much more fun than a lot of small trinkets that I have an obligation to display in my classroom. After a few years, the room is filled with all these well-meant but relatively useless tchochkes!