For years now I have made jewelry specifically for giving to family members at Christmas. Or I've told them to let me know what they want (colors, etc.) and I'll make them something that suits each lady's style.
But otherwise, they make sure I know they will pay me for something they see and want! I do give a Friends & Family discount (done it for both relatives and friends or friends of family), which is a welcome surprise to them, not something they expected.
I would maybe tell them if they see something in your Etsy shop they like, you will take off whatever amount you decide (decide ahead of time!) as a "friends and family discount", and if they're local, remind them they won't have to pay shipping either, and leave it at that. Or ask them if that's what they want for next Christmas (or their upcoming birthday), and they'll realize they have to wait to get it. ;-)
Try not to feel bad, they are not being very thoughtful by putting you in this awkward position. I've read many times that others will take your business seriously if *you* treat it like a business. They'll get the idea.
Like the paper flowers, by the way. :-)