I understand why you feel uncomfortable but agree that this is up to your friends - they know you don't have the budget they do, they have the choice to spend less and they've chosen not to. If it bothered them, they could buy less expensive gifts.
They may be very grateful indeed that instead of expensive clutter they get a smaller, edible gift that they can enjoy without worrying about having to find space to keep it.
Also, consider that you may be spending just as much as they are if you look at is as a proportion of your [disposable] income. I remember a few years ago my younger brother bought me a lovely scarf at christmas, and was very apologetic that it was a lot less expensive than the stuff I'd bought him. We'd had a conversation the previous day about money, and I pointed out that looked at in terms of how much we each had available to spend, he'd actually spent about 4 times what I had (he'd just graduated, and was working allow paid job to get he experience he needed to do what he really wanted to, at the time, and was in rented accommodation in an expensive part of the country, so a much larger proportion of his income was going on basic housing costs) I knew when I bough his gift that he had a lot less 'spare' cash than I did.
I've also had some wonderful gifts from friends who are more talented and creative than I am. I don't suppose that the hand made lip salve and hand cream my cousin gave me last year cost more than a a pound or to to make, but the fact she took the time to do it, and to use scents she knows like, meant a huge amount to me. It was a far more personal and valuable gift than anything she could have bought.