The One Where Phoebe Runs - S6-E7
Trivia: In series 10 there's an episode where Phoebe's getting rid of stuff in preparation for Mike moving in, and she dumps two horrendous 3D paintings on Monica and Rachel. I figured they were just created for that show, but in this episode, 4 series earlier, before Rachel goes out for her run we can actually see one of them in the background - nice to see a long term plot device being used. There's even a shot of one of the 3D pictures in the apartment Phoebe shares with her grandmother in season one, when she's calling information looking for her father. One of these paintings can also be been in season 5, The One With All The Thanksgivings, just after Joey scares Chandler wearing the turkey.
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.