This is hard, we have a big family too and always gets tons of stuff...some useful and some not so much. ;) Anyway, I agree that if they're willing at least suggest an 'activity' like a pass to the children's museum, a dance class, soccer camp, etc. If not, then tell them what he does like and go from there. I also will store some toys after birthday or Christmas and then bring them out in a few months to make them new again. Even though he has clothes, I would probably suggest that too, that way you can spend less on his clothes yourself.
My kids are almost 2 and almost 4 so for the past few Christmases we haven't gotten them a lot from us or Santa, only a few gifts and their stocking. This way we don't spend a ton on them but they are still getting a haul of gifts from the extended family. They are really too young to notice and are still happy opening what they have here. That will change eventually, but not yet!!
Before Christmas you'll probably need to do another sweep of the toys in the house and put away or give away. If you plan on having more kids get a few tubs of things you really want to keep and give away the rest. Do it before the end of the month and it's still a tax break! ;)