Canadians can bring 1L of alcohol (1L of spirits, wine and beer) and some tobacco into the U.S. regardless of the duration of the stay in the U.S., so long as the alcohol and tobacco is for personal use.
You may have to pay taxes and duties on purchases over and above the customs allowance. This will be calculated by a Customs official after you declare.

Upon entering the U.S., you may be asked to pay, on average, the following amounts for products over your customs allowance:

US $2 – $3 per bottle of liquor, on average
US $1.30 per case of beer, on average
US $10.03 per carton of cigarettes, on average

Products other than alcohol and tobacco may also require a duty payment.

If you are Canadian, when you return to Canada you may be asked to pay the regular taxes and duties on the value of items over your customs allowance. Be aware that many items qualify for reduced or zero duty.

Canadian residents are not allowed to combine customs allowances upon their return to Canada.
For example, if you and your spouse qualify for the $400 customs allowance, you may each bring in $400 of goods for a total of $800. However, you both may not import a single $900 TV and claim the customs exemption. In fact, it is likely that you will have to pay duty on the entire $900, not just the value that is above any one or both your personal customs allowances.

Americans are allowed to combine customs allowances so long as the items being brought over are within the monthly customs allowance.

Cross border travellers should declare all purchases, gifts and prizes. Personal belongings that you need for the trip (clothing, personal care products, camping gear, etc) do not need to be declared.
It is best to travel without jewellery, and if you must, bring with you an appraisal form or other document showing prior ownership.

High-value items with serial codes (professional equipment like cameras) can be recorded on a Y38 Form at U.S. Customs so that when you return to Canada, you have proof of prior ownership.

Business travellers should declare items such as samples, marketing materials, tools of the trade, and professional equipment. These items are usually duty free if used for the purposes of conducting business.

In all cases it is best to research.

If you are caught not declaring some or all of your items the consequences will be determined by border services and are likely dependant on the severity of the omission.

Find out information about the Canadian Border Services Agency.

You will likely be asked to pay the duty and taxes; you might get lucky and waved through.
Be aware that your goods may qualify for no-duty or low-duty status (under WTO, NAFTA, Most Favored Nation agreements). If you do not declare and are caught, the consequences are determined by the U.S. Border Services department.
Find out information about the Canadian Border Services Agency.
Yes, children are eligible for a customs allowance. Parents or guardians will declare the purchases on the child’s behalf, but the items must be for the child’s use.

Canadian children’s customs allowance cannot be combined with their parents, and children do not qualify for the alcohol or tobacco exemption.

You save the duty on NAFTA exempted items, and only pay the sales tax, even if the value is over and above your customs allowance.
Your length of stay is not relevant, so even if you have been across the border just for a few hours, you would save the duty, and only pay the sales tax. NAFTA exempted items are goods made in Canada, the U.S. and Mexico and include items like: cellphones, video games, books and hair dryers.

Consider that your goods might fall under WTO or Most Favored Nation (MFN) status and qualify for no or low-duty.

Israel, Costa Rica and Chile have special duty arrangements with Canada. Goods made in these countries qualify for lowered duty.