I have faced a different situation with my son sending a rare email and saying he will not be sending any presents, and does not want a Christmas present from anyone this year, though we are allowed to buy for his children.
I was really hurt. I know they are short of money, largely because he doesn't work. But as I explained to him in reply, giving a present to someone is an expression of your love for them, and to say you don't want anything is actually to reject that love. I would therefore be giving him a Christmas present each year because I love him, and I would be delighted to receive a prettily wrapped bar of chocolate in return; the cost of presents should be entirely what you feel you can comfortably afford. Just take time to wrap it and give it with a loving message on the tag.
Perhaps we are upset when we get something inappropriate because we feel the giver's lack of thought in choosing it means they don't really care about us. But I would never say to anyone 'please don't get me a present' because it could feel like a kick in the teeth to someone who wants to show they care.
After all Christmas is a time to celebrate the greatest gift of love ever given to the Earth, surely we can mirror that in our own tiny ways, even if they may seem clumsy to others?
So be delighted that they want to give you something, smile and accept it with delight, and choose something for them in return. When you thank them, if it really is something that would make DH ill, then you can say 'what a shame your Dad's diabetes will mean I will have to eat them all, goodbye waistline!' and make a joke of it with a broad smile. What you do with it in the New Year is up to you, but your local foodbank would be really pleased to receive it, pay the love forward!