I think I'm sort of with your DH on this. Well here's my opinion -- I think it makes sense for people to get gifts that the receiver wants / will use. I would SO much rather have three REALLY nice gifts for all of xmas than get 10+ gifts I don't want.
So, if the way for the receiver to get a nice gift is for people to go in together, then I think that's the way it should be done.
That being said, I agree that four people with jobs don't need to go in together to get a kindle necessarily. So if I were your DH I'd maybe have just said "hey I'll get the kindle myself and you guys can get something else." I wouldn't, in that case, have an arbitrary $50 limit.
So what I'm saying is that if you have a limit, then gift sharing is a good idea to get the bigger items. If you don't have a limit, then yeah, gift sharing is kind of unnecessary.