Favors are definitely not necessary and are a great thing to cut if you're a little short on money. But, if you're set on having the, here's some cute and cheap favors that you can give that will add pizazz to your wedding.
A cookie buffet is a great alternative to the popular candy buffet. You can easily make the cookies at home a few days before the wedding. You can find the glass jars at places like yard sales and thrift stores for next to nothing. Add some little glassine bags and some monogrammed stickers and you have an adorable favors that your guests can take home and enjoy.
A hot chocolate bar is also a unique idea if you're having your wedding in the winter or up north. Get a few different tubs of hot cocoa mix from World Market and some hot water. Guests can make their own hot chocolate. Add some mix-ins like candy canes, chocolate, and marshmallows and you're guests will love warming up with this treat.
Jar mixes are also a great favor if you have the time to put them all together. You can buy the ingredients in bulk and buy the canning jars from Walmart. Then, make an assembly line with you and some friends and start filling the jars. Top them off with a cute tab with the recipe and you're all set. Check out Heart4Home for some great jar mix recipes.
I did molded chocolates for our wedding and they were a big hit. Really cheap to make too. I bought the chocolate and the molds from Michaels with 40% off coupons. I recommend getting multiple molds so you can do them in batches. I only had one mold, so it took me forever. You can make these the week before your wedding and they will hold up really well. Put them in a clear candy bag and tie up with some ribbon.