My first recommendation would be Noro. The diamonds on the back of the Blocks sweater are done in Noro Silk Garden, color 226, which I got for my birthday. The yarn has a great feel, a great smell, and (though you do have to pick out the occasional bits of pasture grass) is wonderful fun to knit. I may be easily amused, but watching the colors change as you knit the yarn up is endlessly entertaining.
The entire sweater in progress (this is the back, which I don’t have off the needles yet, much less have it washed and blocked) is in three different colors of Noro Kureyon—40, 95, and 182—(my Christmas present) and a simple Fair Isle block pattern.
Same comments about this yarn as the above, except that this is 100% wool rather than wool/silk.
I intend to annoy my family to get me every variety of Noro yarn—there simply aren’t enough holidays in the year.
Enough yarn to get one large sweater will run you about $150-$200 if you buy from Webs, which gives a killer discount on larger purchases. If you’re looking to spend about $300 (and if your recipient likes to knit in smaller gauge, also look at Great Adirondack’s Sireno. It’s smooth, very finished, very silky, and it knits up beautifully on number 3 or 4 US needles (small).
These I can recommend personally as being both wonderful and decadent—real luxury gifts.
Webs has a ton of other wonderful yarns, but I haven’t worn out Noro yet.
And—you are a wonderful gift-giver, Katherine.