If I were hosting, I'd prefer a giftcard. You probably know them well enough to pick out a place for a giftcard. Movie theater, Starbucks, iTunes, a craft store, a winery or a nail place maybe?
I'm not a fan of giving candles and bath and body works - it seems like the go-to thing when you can't think of anything else. The last wedding I was in was a bag with tons of bath and body works stuff - I took it all back because it was like she intentionally picked out the worst smells. :-)
I've had one friend give me an AMEX gift card with a nice note saying for my husband and I I to go out to dinner... loved it. I had another friend give me a gift card to a high-end restaurant group chain that has 8 or 9 restaurants to choose from and said "dinner on me." The amount of the gift cards were both pretty high, so we could easily have a nice dinner with dessert and drinks and not have to pay much at all out of pocket. I really appreciated it.
For a good friend of mine, I recently gave her a gift bag including:
She works at a hospital and takes her lunch everyday, so I got her a gourmet getaway lunch bag (http://www.ebags.com/built_ny/french_bull_gourmet_getaway/product_detail/index.cfm?modelid=124241
I put a bottle of wine, some chocolates, a gift card to william-sonoma, and a magazine subscription for a year to cooking lite (I got it at magazine.com for like $12 / year)
She loved it.