My suggestion would be that she have christmas at her house, and you have christmas at your house. That way you each are responsible for your own christmas with the kids. And if the kids are still young enough to belive in Santa, they can come over to your house and you just tell them that Santa came to your house too....If she doesn't go for that, she is just trying to get money out of you.

Or, instead of giving her money, tell her to give you a list of their wishes and you will get what you can afford or split the list in half. It's all about compromise.