In the meantime, I'll share with you what we're giving my in-laws and my parents for Christmas.
The original plan was to use a black frame with a double white matting. That would have been insanely expensive, so I was thrilled when I found a couple of frames at Gordman's for $15-$17 that had the right number of spaces! I found the letters at Hobby Lobby when the unfinished wood items were 50% off, so they were only $1 each, and the photos were developed at Wal-Mart. The total cost for both gifts was less than $50!
If your mom and dad are like mine, and my in-laws, and are running out of room to put all those fantastic knick-knacks, I recommend doing something like this. Every year, we plan to retake photos so there are always updated photos of the grandkids.
I really like the way they turned out, so I even picked up another frame yesterday to make one for us!