For past photo's I've bought just simple fabric cheap solid color fabrics and thumb tacked it tight to the wall, believe it or not it actually works well. I have seen gift wrap used. Really cute if just of a baby or pet. Make sure whatever you chose is as nice and tight against wal,l drags nicely to cover the floor. So if you are doing the wrapping paper tack top to corners to wall & let drag, don't cut paper. When choicing, just remember the key is just making sure background doesn't become a distraction and you don't see the wall or carpet & give away that this is a home pic. Don't be afraid to mess with some Christmas lights in the image it typically adds a nice soft glow. Also thumb tacking a simple white sheet in a swooping fashion works just as good as professional grade white fabric, its all just about getting the right effect when you hang it. But really the easiest backdrop of them all and it's free nature. Check the website cause it gives tips on times of day for lighting and extra touches to add to the naturally beautiful backgrounds. I really recommend while looking at the Photo Days site play through the videos it gives lots of ideas, lots of easy ideas. ;)
A few FREE photo editors I am currently enjoying & think you will to are: Paint.net & Picasa. Paint.net is a student project that runs similar to photoshop. Picasa has just lots of easy to use filters & great easy to sharing multiple images.
Hope this helps & remember just because the pic isn't posed and not everyone is looking at the camera doesn't mean it's a bad pic. ;) Just means you all have personality.
Our last year's card-
Pics by: Maximo Photography + A Costco layout