I do both. My husband want a pair of short made my me for Christmas last year in a certain print, so I made it happen. The kids wanted an Angry Birds playset, so I sewed them some. But there are bought gifts, too. It's a mix in our house.
I used to buy most of my gifts, but as the amount of people I've had to get presents for has been more and more narrowed down to those who are closest to me, and I've had less and less money to spend, I've been making a lot more of my gifts.