I made craft kits for kids last year, and the good news is I sold every one of the 500 kits I put together. Would I do it again? Probably not on that grand a scale, by the time I got the last pieces bagged and tagged I was ready to quit crafting permanently.
But they were very popular. If I did it again I would look for crafts that have fewer pieces in the kit. I bought pretty much everything I needed from Oriental Trading, who do have a website. Sold the smaller kits for $5 up to $10 for bigger projects which were door hangings and advent calendars.
Any craft that a child can do can be made into a kit, some of the dollar stores around here are selling them in kits these days I noticed, I never included glue with my kits, just all the pieces that go together and clear instructions.
Suzan J

My kids like to make beaded icicles, clothespin deer and a lot of other things that they can just glue together and paint. I would suggest doing a search for kid's Christmas and see what you could fit into a small bag. I would think things like the popsicle stars or snowflakes where you could just glue the popsicle sticks together and cover with glitter or sequins and paint would work. You might find some inexpensive paints like the little watercolors that you send for elementary students. You could cut that one out and add that and an inexpensive paint brush to the bag. Find some other small wooden cutouts for the other paint colors and add that and glitter glue or sequins to the bag.

Here's a previous post I had with the explanation of icicles. Scroll down to my second post on the page. http://ths.gardenweb.com/forums/load/crafts/msg0900265721591.html

Also, I'd have one of each made up to show the kids what they are buying.

Here is a link that might be useful: Popsicle ornament.

Thank you so much Ladies. As always, you all are so brilliant.....
Ok...sjarz...are you willing to share the kits that you had and maybe what you put in them? just as an idea. I promise not to copy!...lol
Thanks again lades

Marci