While it depends on your family and situation, I would likely compose a letter and get it out ASAP, because some people start shopping quite early. It would explain that husband, imaginary DD, and I are refocusing our priorities and trying to change lives, and we want to act to teach DD the value of simple things, as well as the value of money. We are also striving to declutter and simplify. In light of that, this year for Christmas, we've decided to give simple home made gifts to everyone on our list. Our family will be spending the next few months planning thoughtful presents to make for everyone, and then using family time to make them with love and infuse them with meaning. We encourage everyone to follow suit toward us this season. We of course understand that we can not dictate what gifts others give to us, and anything we receive will be done so with love and appreciation. However, because DD has so much stuff, she will be allowed to keep no more than 5 toys of her choice, and we will make a family trip to CharityOfChoice to donate the rest, helping to teach a DD a lesson about the less fortunate. While of course she loves toys like any 5yo, we are focusing within our family on funding her college fund and on spending time building memories with her. We hope that as the Christmas season draws near, all our loved ones take time from the craziness to love and appreciate one another, and reflect on family, love, gratitude, and the other values truly at the heart of the season, and we look forward to seeing you all and wishing you a merry Christmas.
People are going to do what they are going to do. I think it is in poor taste to issue dictates about what you are given, but you can make it clear that you have some preferences and that gifts outside that preferences may not be kept. What they do with that is up to them. Again, how this is received will vary based on the people with whom you are dealing. In my family, if I said, "no more than $25!", it would go over very, very badly, but the above would more or less be tolerated, or even respected. A few people might still show up with the latest Disney Princess Extravaganza gift, which we would either keep or donate depending on our preferences.