I am not one for cutesy crafts that sit and take up space. I prefer to craft useful things.
In our family, we try to get around to making Salt Dough each year. It is fun to make ornaments out of semi-stable “play dough.” I use a recipe of 2 cups all purpose flour, 1 cup table salt (the cheapest I can find), and 1 cup water. Knead together and you have salt dough. You can add oil or glycerine for other effects but I never do. Here is a good instruction page on how to make and bake salt dough. Here is another good one with great pictures. These salt dough ornaments are great gift tags.
Most of our arts and crafts focus on making presents though. Last year we made mini-toolboxes from Altoid tins. We have made Christmas ornaments and jewelry. We have also made sugar scrubs and other gifts. The possibilities are endless. The main thing is to have fun and do the projects together.
What are you going to be crafting?