We did this last weekend. We spent less than $75 for everything including the cake a food.
1- The food was kept simple and cheap - hot dogs, chips and fruit from Sam's. I made the cake.
2 - The decorations were homemade (blew up the pic on the computer then taped all the paper together, put it on the foam board and traced with a ball point pen, the impression went through. I traced the lines with Sharpie and then painted with paints I had on hand. A projector would have worked great for this). Our theme was Spiderman, so I paid very little for some cool decorations. I bought red and blue balloon and blew them up and threw them on the floor. I didn't want to mess with hanging them from the ceiling and didn't have time to pick up helium balloons. The kids loved playing with them.
3 - My son wanted face painting. Spent $2.50 at Michael's (they cost $5 and I used a 50% off coupon). I am not artist so the face painting choices were simple - balloons, flowers, spiders, etc.Kids LOVED it!!!
4 - Pin the tail on the donkey (our version was pin the mask on Doc OCk using the same trick we used for the decorations). Could be changed to fit almost any theme.
5 - limbo - A lot of our crowd didn't get it, but they had fun anyway
6 - All of our prizes, tables clothes, plates, napkins, etc. came from the Dollar tree.
6- Pinata - doubled as our thank you gift (We gave kids a notepad and crayons (3 for $1 at the Dollar Tree with a thank you for coming message as they left - ONLY because those items would not fit in the pinata). We do not have any trees big enough in our yard for a pinata, so the hubby got creative. He attached the pinata to our pool pol and climbed our tall ladder. He leaned over and held the pinata while the kids whacked at it and another Dad, held the ladder just in case.
Our party went from 11 - 1:30 and it was the perfect amount of time. It was easy and very little stress and kid centered. We heard from a lot of people that it was the best party they had been to in a long time. HTH.