Like other readers have mentioned we also went with the gold dollar coin. Somewhere I heard that another parent made up a cute little story about the tooth fairy comes and takes the tooth and goes back to fairy land and uses the tooth to build a castle made out of teeth.
I have heard of other tooth fairies giving more, but you have to be careful. When my son lost his first tooth he was so excited he told our neighbor. I told them our tooth fairy was going to bring a gold dollar. Our neighbor shared a story about how when they were in college they worked as a counselor one summer and one of the children lost a tooth and all the counselors wanted to chip in and help the tooth fairy and the kid got a really nice amount from the tooth fairy and told all the other kids at camp about it. When word got out - several of the other children started pulling their teeth out! The tooth fairy only left a nickel for the children who pulled their teeth out. There was a lot of disappointment the next day, but they did not have any more kids pulling good teeth out.
It is always exciting to start these traditions with our children. I also gave each of my children a little handmade tooth fairy pillow similar to the one my great grandmother gave me when I was little. My son recently lost his last baby tooth a few weeks back. Good luck.