I came across this link and fell in love with the idea.
http://tracys-trinkets-treasures.blogspot.com/2010/12/handmade-ornament-with-special.html
I finally made one for each of my kids and I'm quite pleased with the way they turned out!
I also want to decorate a box for under the tree to keep the previous years' letters in. I wonder where I can find shallow, 8.5 X 11 boxes...