Aaaaw, I looked all over the net to find that pictures yesterday Serpy. Thanks for finding it for me!

The (usually) paper crowns come out of these Christmas Poppers or Christmas Crackers

They look like this:
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"A cracker consists of a cardboard tube wrapped in a brightly decorated twist of paper, making it resemble an oversized sweet-wrapper. The cracker is pulled by two people, and, much in the manner of a wishbone, the cracker splits unevenly. The split is accompanied by a small bang produced by the effect of friction on a chemically impregnated card strip (similar to that used in a cap gun).

In one version of the tradition the person with the larger portion of cracker empties the contents from the tube and keeps them. In another each person will have their own cracker and will keep its contents regardless of whose end they were in. Typically these contents are a coloured paper hat or crown; a small toy or other trinket and a motto, a joke or piece of trivia on a small strip of paper. Crackers are often pulled before or after Christmas dinner or at parties."

source: http://en.wikipedia.org/wiki/Christmas_cracker