You have gotten lots of good ideas. I agree with avoiding anything marketed for teachers (mugs, signs, shirts, etc. with the word "teacher" on them). There is only so much room in a house for that kind of stuff and they probably have tons of it already - how guilty must you feel when putting stuff kids gave you in the garage sale box....
I think that gift certificates to a teacher supply store is a great idea - then they can get something new for their classroom and it is a practical gift which will remind them of your child when they use it year after year.
Or how about a cd of your favorite children's music for them to use in their classroom? We love Red Grammer - check him out!
I totally agree that a handwritten letter of what the year has meant to you as a parent, your child's favorite parts of the school year, etc. would be more meaningful than anything you could buy.
For my kids' preschool/toddler group teachers, I have made 5 x 7 Creative Memories albums for them as end of year gifts. It is a lot of work for me but they turned out darling and I really think it was a special thing for the teachers. On the title page, I used gardening stickers and titled it "Thanks for helping us GROW!" Then each child had his/her own two page layout with multiple pix of the child at school (tried to get at least one with the teacher in it and at least one with the mom in it too), a small school individual photo, and bio information (kid's full name and birthdate, mom's name, kid's favorite parts of school and/or a quote from the child about school or the teacher). I put the child's first name in sticker letters at the top left of the first page. After all the kids' pages, I did lots of pages of group shots (all of them together on field trips, dressed up for Halloween, etc.) with a lot of "we learned..." pages - pix showing them doing all kinds of things like sit in circle, wait your turn, work together, etc. At the end, I had some pages titled "Thank you so much!" and let each mom write in a thank you note. On the last page, I put in a quote a like very much (not sure of the author - sorry) "One hundred years from now, it will not matter what my clothes looked like or what kind of car I drove but the world may be a better place because I was important in the life of a child."