I have taught my kids to say thank you, regardless of whether or not they like the gift. "Aunt So-So took time and thought of you and got you something because she loves you. Even if you don't like it, you say thank you because you should appreciate she loves you enough to think of you and want to give you something." I thought this was what most people did.
Until I witnessed my MIL opening gifts. "That wasn't what I wanted." "Well, I guess this is the year everyone is getting coffee and I don't like these big mugs." "OMG, these are horrible. Why would you buy me these ugly old lady clothes?"
I felt my jaw drop. I couldn't imagine responding like that (FYI, I got the coffee and mugs because they love coffee and at that time DH and I were just dating). Thankfully, DH responds like his dad, simple but quiet and sincere "Thank you." And for the record, I love my MIL and we get along fabulously, but we only get her gift cards any more because there is always SOMETHING wrong with any gift and I'm not wasting my time picking out what I think is a great gift only to have it unappreciated. So, OP, I understand why you felt the need to stop. I probably would have tried to talk to your nephews about being appreciative but your SIL probably wouldn't have been a fan of you "interfering" either.