Local office supply stores and discount stores offer several choices. I looked for at least two types of paper, so letters to siblings would be unique, and I also wanted Santa's picture to be on the paper. Envelopes can be found in red and green. However, my advice would be to stay clear of the colored envelopes, especially red. Red envelopes can slow down processing at the post office.
Some stationery comes with matching envelopes.
Another option is to purchase white envelopes and decorate them with clipart. I had a color printer and scanner, so this was my choice. Of course, there are many ways to use clipart or stickers to decorate the envelopes as well. Different sizes of envelopes can be used. I hadn't considered the idea of enclosing gifts until I visited the PASE web site.