It depends on how good a friend and if they have bought presents for me or my kids in the past. If the kids are older I get them giftcards and if they are younger I get them something that shows I have been paying attention to what they like.
I will definitely buy a gift for their kids on their birthday, if we were invited to their birthday party. Not because I want something in return, but because I am reminded that it's their birthday and that we should bring a gift.
Depending on the situation, you probably should. If you are present during the birthday party, definitely. If not, but you see the person at least weekly, then yes.
Talk about it with your good friends parents-gifts can range from well-wishes to toys, but it's important that this topic is brought up. Some people prefer that there kids not receive too many toys and of course, budgets should be considered. Discussing these things prevents misunderstandings.