mmm, the christmas gift panic.
Last year my housemate and I decoupaged glasses and they turned out really well. Here's how!
1. Buy glasses at any discount store. Martini glasses, simple tumblers, and shot glasses turn out really well. The fewer curves the better. Glass plates also work well, with the pictures glued on the back facing the front.
2. Cut out a bunch of pretty pictures from magazines. I usually cut out larger background pictures, like grass or sky, and then add smaller pictures to it. It looks less cluttered this way.
3. Using mod podge (great stuff, available at any craft store, also works well to put glitter on shoes) decoupage the pictures on the outside of the glass facing in (so you see the pictures when you look in the glass). PICTURES THAT GO IN FRONT SHOULD BE GLUED ON FIRST. Use plenty of mod podge and get as many air bubbles out as you can.
4. When finished, let it dry well (give it about a day). Paint it with acrylic paint. Let the paint dry.
5. Paint it with polyurethane to seal it. Pay special care to the edge of the decoupaging--this will get yucky if it's not sealed well.
I gave these all away, so I don't know how washable/durable they are, but if they're sealed well with polyurethane, I don't see why you shouldn't be able to use them like normal glasses and hand wash them. Especially since all the glue and paint and stuff is on the outside, and doesn't touch your food/drink. I wouldn't put them in the dishwasher though.
Lots of messy fun!