I have frank discussions with my family and friends about what we will do regarding gift giving, way in advance. I ask my friends to limit their spending to a dollar amount per year, and stay within those boundaries myself. In fact, last year my friends and I agreed to do birthdays only, and instead of giving a gift, we helped do something for the party (bought balloons and took care of getting them there, for example). This kind of help is way more appreciated than gifts, especially when your kids are young and haven't learned to be materialistic.
Definitely say something to your friend. I would want a friend to say something to me. I would recommend when you do say something (and I'm not saying it's easy), that you have a plan of what it is that you DO want. Make it into something she is helping you with. And once you've said something, if she continues doing it, remind yourself that it's her issue - maybe she needs to buy people stuff as her way of showing love (my dad does this). Or you can do what I've done - refuse a gift (like a $30 dress!) and say that you can't accept such an expensive present ($30 is a box of diapers, if she wants to spend that kind of money on something your daughter can wear!). I think I've been your annoying too-generous friend to one of my own friends....now I know how that might make her feel!