You use them to exchange for items at the different collectors.
You will also, AFAIK, need them to get the hat at the end of the event.
Of course you can salvage them too.
Candy canes weren't required last year to get the hats.
You just need to be around the avatar of either grenth or dwayna. I believe it has something to do with the amount of presents collected/given.
Apparently what happened last year is that people assigned certain districts to be a Grenth or Dwayna district. It wasn't fool proof but worked most of the time.