Although we have what I consider a modest income (approx. $60k after taxes) with both of us working full time, it amounts to more than any of my ILs household incomes. All of my ILs make, and continue to make, what we consider poor financial decisions. They purchase things from Rent-a-Center or Aaron's, or max out HELOCs to remodel a paid-off home in a terrible neighborhood (so it is now "worth" far, far more than it could ever sell for, but they keep complaining about the dangerous neighborhood and how they can't possibly afford to move because of how much they'd lose on the house). DH and I save money every month, have a retirement account, and find creative ways to cut expenses. We buy used whenever possible, I can my own fruits, sauces, etc, I make our laundry soap, we don't have cable, and we don't do credit cards. We also bought a home we could afford on one income, and it is considerably smaller than anyone else's in the family, though it is on a bit pf property in a decent area.
A few Christmases ago, we saw that MIL was struggling financially. She was constantly complaining about not having enough for this or that, and DH and I were concerned. We talked to everyone in the family, and we decided to draw names for the adult gifts instead of getting something for everyone. IMO, the adults don't really enjoy the gifting like the kids do, and it had turned into a gift card exchange (which I feel are terribly impersonal unless someone is saving for a larger item). DH and I, as well as his aunt and uncle (who are also financially responsible), stuck to the plan and only bought for the person whose name we had drawn. SIL and MIL, who are the worst off financially, still bought something for everyone. DH said something like, "But you weren't supposed to get us anything!" because he was surprised, which caused SIL to launch into a tirade about how we were cheap because we could afford gifts but didn't want to buy anyone else anything. They TOTALLY missed the point that we were trying to help out others who go into debt every year for Christmas. Everybody was offended, and it was pretty awful.
Since that Christmas, DH and I have pretty much said "screw it", as it seems like the best intentions have the worst results. We buy gifts within our budget, and just let everyone else do what they want. If they think we're cheap, so be it. My family, OTOH, are happy when presented with a small basket of handmade items (jam, apple butter, pasta sauce, etc), but I know the ILs wouldn't use or appreciate something like that. We usually get each couple a gift card to a restaurant, in spite of my aforementioned objection to them, because we know they will use/appreciate them.
Personally, I feel that anyone who is disappointed with a gift is unconscionably rude. It is a gift, not an obligation. The receiver should be grateful that someone was thinking of them, regardless of whether or not the gift is something they would have chosen themselves. They may not like it (I've received plenty of gifts that were simply not to my taste, and often DS's birthday and Christmas gifts are re-homed because they are not in keeping with our values), but they should appreciate the thought behind it.