The One With Five Steaks and an Eggplant - S2-E5
Plot hole: Chandler has always loaned Joey money for various things (rent, acting classes, Christmas gifts, etc), so he shouldn't be surprised to learn that Joey doesn't have money for fancy dinners or birthday celebrations. Plus, Joey never seems to have a problem taking money/handouts from Chandler - why now? Also, Chandler explains that they're buying Ross a cake ($20), but why doesn't Monica (the chef and his sister) just make him one? (00:07:50)
Answer: Usually by the seventh night of Hanukkah you don't know what to get the other person, and you will probably resort to getting the other person something insignificant. Chandler is basically saying that the pen is a stupid gift.