The One With Rachel's Crush - S4-E13
Other mistake: Monica supposedly single-handedly changed over the guys' apartment from carpet to polished hardwood in two days. There's no way that someone of her size could have moved all that furniture solo (Rachel didn't help since she's totally surprised), stripped off all the carpet, sanded the wood, stained the wood, let it dry, and then replaced all the furniture, in two days.
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.