If we had a million dollars to spend on a gift, the only thing my husband would want is more pictures of his kids. I think a lot of Dads appreciate little things from the heart. Our kids always make a card. Construction paper, glue, glitter, handprints, feathers - the works!! It's fabulous, but he treasures every one.
Here are a couple of ideas for cool gifts - not quite as "glue & paper", but the kids can still participate...
* Shutterfly.com has lots of cool things that can be made from your own photographs. Personally I love the brag books and photobooks. You can make an entire scrapbook and they print it for you (kind of like a yearbook). There are different templates, themes and sizes. Use it to tell a story or just write captions for the photos you choose. Very cool!
* My mother-in-law had cookie cutters made from each of our kids handprints. Each set has a cookie cutter the size and shape of the handprint and a second heart-shaped cookie cutter that rests inside the handprint. We use them as wall hangings and they are by far one of our most cherished and most unique gifts. Not sure exactly where they came from, but know they were custom made - I'm sure you could find something online (she's from CA, so could be something local).
* For Father's Day a few years ago, I had the kids help me put together a big gift basket of "Daddy's Favorite Things". Each of the kids got to contribute items. We included pictures, hand-made cards, his favorite candies and snacks, some music - you could include anything! Some of the items were silly, but it didn't matter because the kids picked them.
Have fun and good luck!