K.B.
Hi Donnna-
We have had all of my children's birthdays at home. We rented a moonwalk for one and had pony rides for the other two. The bottom line is, kids this age love parties, it doesn't matter where it is or what the theme is. As long as you have something for the kids to do whether that is renting a moonwalk or just having crafts or games to play they'll have fun.
The real issue is whether or not you want to have the party at your home or somewhere else. If you're ok with the work it takes to get the house ready for the party, deal with the mess that's made during the party, and handle the clean up after the party then it will be fine. If it's worth the extra cost to you to have it somewhere else and avoid the hassle, then parties at Pump It Up or any of the My Gym type places are great too.
Also keep in mind that most parties these days are more extravagant than what we had as kids. As a result, having a "simple" party (pin the tail on the donkey, musical chairs, red light green light, etc) actually is unique for kids today and they love the games because they don't get to play them all the time like we did.
Good Luck,
K.