The One With the Baby on the Bus - S2-E6
Trivia: Phoebe loses her job as a singer at Central Perk. As a protest she sits outside singing for money. Rachel comes out to give Phoebe a cup of coffee. They talk for a while and Phoebe reveals that one of her donations for playing "Smelly cat" was a condom. A moment later a guy comes running to get back the condom, played by Giovanni Ribisi. He's not meant to be her brother, as her brother says when she meets him that he's never been to the city before - just a random incidence of an actor playing different roles across series. (00:18:06)
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.