It's very appropriate to spend money on volunteer appreciation. As you noted, volunteers give an awful lot to the school; there should be some real recognition of that fact. Unfortunately, it's something that a lot of parent groups leave out, usually because the ones organizing the volunteer appreciation are volunteers themselves, I think.
How much to spend really depends on your overall budget -- a group that raises $25,000 could feel comfortable spending more than a group that raises $3,000, for example. A dinner is a common way to recognize volunteers; if you're doing it at a restaurant, see if you can arrange a discount in exchange for publicizing the restaurant's "sponsorship" of your volunteer appreciation event to your members.
Overall, volunteer appreciation can take a lot of different forms, but there are two keys to making it as effective as possible:
1. Include everybody in your appreciation efforts, even people who just donate an hour or two.
2. Don't limit your efforts to a single event; think about small ways to appreciation volunteers all year long.
Here's an article with some good and simple suggestions of ways to do just that:
www.ptotoday.com/pto-today-articles/arti...our-volunteers-right
Craig