Unfortunately my DD isn't Invited to school "parties" as the parents know shes diabetic and don't want the "extra work" that comes with it.
that is so seriously wrong!! yes, you have to change your catering a bit for diabetics, but it's not that hard - and it's just rude to exclude a child (or anyone!) like that

we are having DD's birthday next month and knowing we've invited people with allergies and diabetes, i simply ask for some guidance on what is and isn't ok. we cater for people no matter what special requirements there are (vegetarian as well - it's really not that hard!)

as to how much to spend on kids at school, i don't know. i think it will really depend on who the child is in DD's life. "just" a class mate will have less spent on them than someone DD considers to be a close friend kwim? At a guess, i'd say about $10 for average. probably up to $20 or $30 for her close friends (or long term family friends where we've had a relationship with them for quite some time as it then becomes a gift from ALL of us). you can pick up some decent books and/or craft stuff for a small amount really. I tend to avoid character stuff due to the pointless added expense too - even if the party child has a "theme" (DD is a tinkerbell nut for instance) i wouldn't shop to that theme unless i found a bargain (ebay is awesome for that - esp if you have a lot of kids at once and can grab from one seller!)