Most goody bags are just more plastic junk--from the stuff inside them to the bags themselves--and I have never liked the concept at all.
They come from the older tradition of party favors, though, and there are all kinds of ways to make a party favor both fit the theme of a party AND be meaningful to the recipients.
An example? Last year, my daughter, who was born in springtime, decided she wanted a "goddess" party--all the girls dressed up as their favorite goddess and we did a lot of activities related to that. Including...I got some little plastic pots that looked vaguely Grecian, some potting soil, and a bunch of seeds for flowers I KNEW would grow easily, as well as some little glass baubles, birds, and other decorative items, and the girls all planted a "goddess garden" to take home.
A couple of years ago, after a trip to Southern CA with grandparents, she decided to have a Hollywood themed party. We had them all dress up as movie stars, they came down a red carpet upon arrival, did all kinds of movie themed activities, including having a "Grumman's Chinese Theater" hand print in some little stepping S. kits. That was their party favor.
MANY years ago, when my now-17 year old was turning 7, she wanted a hula hoop party. It's EASY and CHEAP to make a great hula hoop. I spent about $2 per kid to buy supplies at the Home Depot, including bright electrical tape to decorate them. The kids made their own hula hoops, spent about two hours playing with them, and then took them home!
So...what I'm getting at is follow your theme and make it something they might actually want!
Decorating cupcakes? I would get some little cupcake pans, or some other baking oriented item, add a bottle of sprinkle sugars, something like that. Maybe add some cupcake stickers. Put it all in a cake decorating piping bag. If you can find them cheap, of course...;)