Different cultures definitely have different attitudes about showers. My friend who is Jewish won't put the last stitch into a baby blanket until the baby is safely delivered (this is common in her culture not to buy ANYTHING for the baby until then, when the family runs out like mad while mom is in the hospital). It's avoiding calling down bad luck I think.
Here, showers are very very common (more than they should be in my opinion for second babies though...). They are also almost always hosted by family members. The tradition that it not be hosted by family members likely is a carryover for wedding showers which aren't to be hosted by the families. Let me also tell you that this rule is broken far more often than not such that I'd say it's really a totally dead guideline except for true etiquette purists (who also would never dream of sending an rsvp card for a wedding because you'd write a note back rsvp'ing on your own stationary).
I think you need to figure out a few things.
1) What is your budget?
I've seen gifts ranging from $25 (rare) to $50-75 for friends, and well upwards of $100 for good friends and family. It's a little crazy. Set your budget, shop with sales and coupons.
2) What do you feel comfortable giving?
I note a lot of judgment from you about gifts that you feel should be given. Is there *anything* you would find acceptable? (I think you can delink what you would want to get from what they would want to get. It's not insincere to give what they would want, it's far more thoughtful than trying to impose your wishes on them by say, giving cloth diapers when they aren't going to cloth diaper.) So to a certain extent I think if you are giving a gift you put aside what you would do in favor of their preferences. But that said, you can - like I do - opt for more practical items over less practical items. I get things like baby carriers, changing pads (which people often avoid for not being "cute") and stay far away from outfits which everyone seems to love and buy more than is needed in sizes they grow out of in a blink. If you can't think of anything, I encourage you to give a gift card instead.
Ideas: Diapers, used but good looking books for their library, practical oriented gift items (baby carrier sling, changing pad, diaper genie), things for the mother (creams, nursing bras), make a homemade item like a quilt, give a gift booklet for things like "10 frozen dinners delivered within 2 weeks of the baby" (list each one you plan to make) or "2 nights babysitting" or "2 afternoons babysitting while you run chores or have quiet alone time" etc. Note that this would be unusual, so will likely go over really well or fall, depending on your friend.
Also I'm going to say I was shocked to go to some showers and discover that the wrapping of the present was this big hidden competition to see who wrapped it the cutest. Just an FYI.
