The One with George Stephanopoulos - S1-E4
Trivia: When the girls are out on the balcony discussing what the boys would be like in bed, their discussion foreshadows their future romantic entanglements. Phoebe speaks highly of Joey, Monica of Chandler, and Rachel of Ross. Although Phoebe and Joey were never technically together, they often acted as a pair.
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.