My thoughts:
1. It is truly, truly the thought that counts when it comes to git-giving, so if that tie on sale is the perfect thing for the person who got you the nice watch, then the tie is what you should get them. Also, since you should always remove the price part of the tag on gifts you give, how are they to know it was on sale?
2. You are not required to get everyone who gave you a gift one in return. If you want to, though, you can, OR you can put them on your shopping list for the next year, or just do something nice for them during the year, i.e. "I wanted to buy you lunch/ a cup of coffee, etc. since you were so thoughtful toward me at Christmas." I agree with those that have said people expecting gifts in return don't have the right mindset about this Christmas thing. If you want something easy, since they're work friends, buy them all nice coffee mugs and a $5 gift card to Starbucks. Easy peasy. Oh, or buy them a funny ornament. Place like Walmart and Target have TONS and some are really funny. Whatever you decide, your gifts don't have to be of equal or greater value, they can just be thoughtful.
3. On the tree discussion, you don't HAVE to cut down a tree at all. I can remember years we were too strapped to buy a tree and my dad just decorated a little, potted norfolk pine. Perfect! And sustainable! BUT, Christmas trees do smell nice!
4. Oh, and on the wrapping quandry: I can't wrap to save my life, which makes wrapping even more fun for me. I seriously crack myself up with the various folds and tape placement I use on my gifts. And you can always use gift bags. OH, and lot of places offer gift wrapping for you. Like Barnes & Noble or Macys. Just get them to do it.