rude. especially for a kids birthday party.
1) you either want a gift or not - if not, then say don't bring gifts. don't ask for cash instead.
2) they are only kids for such a short amount of time! why not let them enjoy those few years of birthdays, surrounded by presents, ripping open wrapping paper? if you really have a problem with clutter then periodically cull the toybox and give them to charity.
3) a gift is about the intent, not the actual product. i personally would prefer a home-made gift that someone put time and thought into compared to money.
4) i'd rather teach my kids that money is not the be all and end all to life. that money is incidental, not directly related to enjoyment, fun, celebration (which is what birthdays, weddings etc. are meant to be about) as opposed to what a person gives you and how much.
just old school