Yes, it's ok to exchange and return gifts. Once the gift is yours, it's yours to do with what you please. In a perfect world a gift giver would understand that not all gifts stay where they are given and would not ask after it lest they put their friend or loved one in an awkward position of explaining that they didn't like it. Unfortunately, it's not a perfect world so people do ask. This is the time for creative answers. You don't want to appear rude and say you didn't like it, or suggest they should have read the registry so they would know you had a yellow nursery and not a purple one but if this person went through the effort to give you a gift, you should be careful of their feelings. Suggest that the gift was lovely but outgrown and loaned to a pregnant friend, or that the item was damaged and when you went to exchange it they were all out of that item so you got a replacement that was similar. For fragile things, you can tell of its untimely demise when you bumped into it after a 3am feeding. Obviously, for items of which you received duplicates, you can tell each person how you love the one you have, and not tell any of them that you returned the other 4! If the item is from a close relative that you will see often and who might notice the lack of said gift, it might be smarter to keep the item and use it when that person is around. The bright purple and green afghan might not match your perfect yellow nursery decor but it was probably made with love and love doesn't need to match.