The One With The Cake - S10-E4
Plot hole: Judy says that both her parents died very young. However, we saw her mother's death in "The One Where Nana Dies Twice" and she was quite old. Also, in Season 7, 'TOW Phoebe's cookies', Jack Geller tells Chandler that his father in law still thinks he is a lawyer and says "So if you ever see me giving them legal advice, just nod along," implying that Judy's parents were both still alive.
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.