The One With The Ballroom Dancing - S4-E4
Revealing mistake: During the end bit, before we get to see Phoebe when she is being interviewed at Lara and Jeni's Massage, if you look closely at the name of the massage parlor, you'll see that, although the camera shakes and bumps, the words stay on the very same spot on the screen. Obviously the canopy was blank and the name was digitally added later.
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.