Hi J.,
The problem doesn't sound like they get too many toys (although they may) - the problem is that you said you don't feel like they appreciate what they have. That is, in and of itsself, an issue. And - it won't go away just by limiting the amount of gifts they get. They'll just be resentful that they aren't getting as much but still won't appreciate what they do get.
My daughter has a friend who litterally has everything on the face of the planet. Her bedroom is bigger than our living room. She's 11 and has an iphone and a mac computer - of her own. She had meet and greets for the last Jonas Brothers tour and Taylor Swift tour and also got to meet Lady GaGa at Lalapalloza. But this kid is the nicest most well adjusted kid you could EVER meet. She would give you the shirt off her back if you needed it. She clears her plate when she's done eating and really has a sense that she is LUCKY to have parents who can provide that. She doesn't think she's better than anyone else and she certainly doesn't feel ENTITLED to receive any of it. And she never looks down on us or is snotty because we DON'T have what she has.
So, I'm not sure what works for one family will work for another. If they can't organize their toys and/or they don't take care of their toys.... then you have too many. If they can organize them and take care of them then however many they have is ok.
For my daughter - we typically go through her room 3 or 4 times a year - we just did it last week (which coincides with BTS and her b'day) and we'll do another before Christmas. Anything she hadn't worn or played with in the last month got put into the "donate" pile. But she's 11, so she can participate in this now and will pull stuff out on a regular basis if it's cluttering up her room.
When she was little I would 'rotate' her toys. Anything I hadn't seen her play with I would remove from her room. If a couple weeks went by and she didn't miss it (unless I knew it had sentimental value) I would put together a bag for goodwill.
When she was 5 or 6 I started getting her involved in the process with the talks about their being kids who don't have any toys and letting her "donate" toys she didn't play with anymore to kids who didn't have any. We also volunteered for the foodbank at the church we attended at that time, so she was used to seeing kids who had much less than her. That sort of just automatically made her more grateful for what she did have.
I guess to actually answer your question - I think a kid has too many toys when they don't have time to play with all of them within a couple weeks to a month. That's a good time frame when they should have "gotten around to" all the toys that interest them and that they have time for. Anything more and it's just too much clutter.
Good Luck