The One Where Nana Dies Twice - S1-E8
Trivia: In the "One where Nana dies twice" at the end of the episode the cast looks over pictures of Ross and Monica's Nana. One of the pictures is labeled 'Me and the gang at Java Joe's'. Java Joe's was one of the name possibilities for Central Perk during the show's creation stage.
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.