We've set a limit for each DGS for Christmas and birthdays, and check with the DC as to what we should get. This year we'd seen Magformers at a children's festival, so suggested we bought a few sets of them, and they were delighted with that - they'll last for years, don't take up space, and can be added to. If there's nothing needed they get the cash to pay for something later in the year or put in the savings accounts. There's nothing new in this, as my parents and in-laws used to do the same for our children back in the day.
We do have a lot of the DC's old toys here, a full bookcase of books, and treasures that I've found at charity shops, so there's always plenty for the DGC to play with when they come here. Sometimes the DGS "borrow" something for a week or so - I've noticed the parents are always glad to give them back!
Don't whatever you do get into a competition with the other grandparents - thereby lies madness. 