First thing is to get over the idea that, if everyone else spends $20-$25 on gifts, that you must do as well.
I think $15 is a nice compromise. If something is on sale, I can sometimes get it to $10, but I don't spend less than that. This is in large part because I had a mom who was too cheap about these things. As a child, I didn't even notice, but I imagine the parents of other kids noticed that my mom shot too low.
But a $15 lego set or $15 worth of art supplies? Or a $15 Nerf ball? Nothing embarrassing about that. It's not like you're bringing a dollar store toy. And if a $5 difference in gift is really noticed among your friends and affects your relationships, then maybe you need new friends. I was refreshed the other day on a school field trip when another mom expressed how she thinks other families spend too much on gifts and that she likes to spend around $10-$15. And I don't think of her as particularly frugal. I guarantee you other parents feel the same way and that we are all just doing what we think we have to do rather than what we want to do, which is spend less.
I refuse to ratchet up the gift giving and the price tag. What happens when you enter a group of parents that spend $30 rather than $25? Do you just do that instead? Thankfully decent presents can still be found for $15, and that's a number I'm sticking to, for the near future at least.
Mind you, I didn't say to this mother that I would prefer we would dispense with gifts altogether, because it's just not going to happen. But I was just saying to my husband the other day how I wish we could start a cooperative in which we got 25 kids in each of our kids' grades. We would all agree to do "no gift" parties and we would all invite all 25 kids to the parties. For the cost of a $100-$300 (whatever you want to spend) our kids get 25 events to have fun together with no worry of gifts and added clutter to our houses. Doesn't that sound lovely?