Hand held laser pointers have been popular for troops expecting to get ambushed. The laser pointer makes it easier to show where everyone should shoot. Sounds crude, but it works, and has worked many times. It also proved popular for raids as well.
The army issued GPS receiver (the PLGR) is old and put to shame by newer GPS equipment. The 82nd Airborne division went out and bought Rhino GPS units for all the troops. This unit was lighter, smaller, got more time out of the batteries, and picked up the GPS signals faster than PLGR. Many troops had already bought the Rhino (spending about $200 to do so), and similar models. But many troops are stuck with the PLGR and would appreciate something better. Weight and battery life are the most important factors.
Better desert boots are popular. The ones issued do not stand up well to the heat and sand. Some troops have been getting their hands on Iraqi army boots, which are lighter and more sturdy. However, there are outfitters for desert trips that have some boots built for the rigors of stomping around in a desert environment. No clear cut leader in this department yet, though.
Bolt cutters and Battle Axes. Combat troops spend lots of time making raids on Iraqi compounds, homes and industrial sites. Bolt cutters come in handy. Also popular are "battle axes." Actually, these are similar to the ones that firemen use for breaking and entering. But calling it a "battle axe" appeals more to the troops than "fireman's axe."
In many units, the Gerber multi-tool has replaced the bayonet. The multi-tool has been popular with troops for years. About the same size as a bayonet, the multi-tool includes needle nose pliers, a wire cutter, a drop point knife blade, screwdrivers, a can opener, a bottle opener, among other things. The troops love this stuff.
Canteens are considered so 20th century. Today's trooper wants a camel-back hydration system (a bladder of water carried on your backpack, with a tube that allows you to sip water as you need it without having to use your hands to get the canteen out.)
While Christmas is past, some of these items would make a nice Valentine's Day gift. Or just a "come back alive, baby," gift. It's always appreciated.
OK, this is too late for Christmas (unless you're Orthodox), but if you have a friend of family member serving with a combat unit in Iraq, there are a few non-lethal items that have proved highly popular over there and would make a great, maybe lifesaving, gift.