Note: Mine turned out pretty odd because I got extremely impatient. So be patient and yours will be great!
Get Model Magic from your local craft store. You can buy white or buy colored, it is up to you. Roll it out, but you still want it pretty thick. Press your little one's foot or hand into the dough. Cut out around the print to be the shape you want, such as a heart. Then press the tip of a pen or other small object into the corner of the Model Magic. Let it air dry for a few days and then string ribbon through the hole and you have an extremely memorable Christmas ornament.
I have tried coloring my Model Magic before and it didn't work very well, so if you want colored it might be best to just buy the colored dough. Model Magic is the best thing I have found for this project. It won't break like plaster if dropped and it doesn't crack like dried play dough does.