Lately Goodwill has been getting a bunch of the excess unsold seasonal items from Target. They had tons of 2010 Target Hanukah stuff at Goodwill and I managed to snag paper plates, napkins, a plastic plate, gift bags and dreidels. I made little party favors of a few pieces of chocolate gelt and a dreidel wrapped in fabric with tags with every possible spelling of Hanukah.
For decorations I made these felt circle garlands from this tutorial on the purl bee. They couldn't be simpler or cheeper. It only took about 4 sheets of felt which were less than a quarter a piece. You cut them into circles of varying sizes and then just run them through the sewing machine. I also used some of our left over wedding finger knit chains.
I also made lots and lots of six pointed paper snowflakes, but the cats managed to tear down any that were in their reach.