My sister and her daughter used to stay with me over Christmas and we'd always play Gran Turismo. Usually, we'd race with Mini Coopers, and by race I mean I'd slam and bang against them and send them into the wall a billion times while taunting them, then pretend to screw up at the end so they could win.
Actually, though it's not local multi-player, by far the biggest Christmas hit at my house was the year I bought AudioSurf. It was an absolute smash at the family party, with everyone clustered around my PC. I was the song selector; I'd lob a softball at someone to give their confidence a boost then next I'd cream them with something metal. Honest truth, the Wii my niece got that year was mostly ignored in favor of AudioSurf.
Yeah, I know I ignored the topic. Uh.
Gran Turismo
Portal 2
Borderlands 2
That Sonic racing game
Mortal Kombat