If you really don't want to participate, I don't think you have to. At his age the kids won't be cognizant of the fact that he didn't participate, and I assume he would still get stuff, unless they organize it beforehand so that only the participating kids exchange cards. Even so I'd think the carers would be keeping the kids busy so it wasn't, say, two kids sitting there going, "Why is everyone else getting stuff? I want stuff!"
If you want to participate, I think it depends on how much time/effort you want to put into it. You can probably pick up a box of generic or character-themed valentines about anywhere this time of year, for a pretty low price. Check the dollar store, for example. You could also cut out hearts or other simple shapes and glue them to a folded piece of paper, or use some fun stickers you have lying around. They don't really have to say anything profound--if you can get your child to draw a smiley face inside the card, or scribble his first initial or something, I think you're good. I'd say it's probably a pretty low bar at this age.
And I don't think you have to include anything with the card, but of course you could do crackers or stickers or really, any cheap baby-safe trinket. If you go to the dollar store for the valentines you may find something you never would've thought of.
I mean, personally, it does seem a little silly to me, but it could also be seen as an opportunity to do something creative and fun for the parent, that the kids might be able to appreciate in some way. I remember a couple years ago, when my friend Amy's child was only a few months old, she was baking cookies, making paper valentines, and
buying stuffed animals to give to the other kids in his daycare.